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NAB ready to pay the piper

Radio board agrees to pay performers for music

The radio board of directors of the National Assn. of Broadcasters on Monday gave the greenlight to a plan in which stations would start paying performers for playing their songs over the air, but they placed a series of conditions on their support that raise doubts if a compromise with the music industry reached last summer will go forward.

Tom Matzzie — spokesman for MusicFirst Coalition, an org of performers, musicians and record labels — said they were “disappointed that (the NAB board) failed to vote on the deal both parties agreed upon in July.”

“After a quick review, this term sheet differs significantly from that agreement,” he said. “We will be reviewing their term sheet further.”

MusicFirst has waged an aggressive D.C. lobbying campaign to pass Performance Rights Act, in which stations for the first time would be required to pay musicians when their songs are played over the air.

The radio industry has long resisted such a move, arguing that it provides a valuable promotional platform for performers.

Last summer, after months of negotiations under pressure from congressional leaders, both sides announced they had come up with a compromise in which, among other things, the music industry would seek to collect lower fees and the Copyright Royalty Board would no longer set the royalty rates for broadcast and Internet streamed music. At the time, the NAB said it still needed to gather input from its members and the compromise needed the approval of its board.

The most provocative aspect of the compromise was that each side would agree to push for a congressionally mandated requirement that mobile devices include a radio chip so users could access station broadcasts. That immediately triggered opposition from the Consumer Electronics Assn., among other tech groups.

The NAB’s conditions spell out in detail what the revised legislation should contain.

Among other things, the NAB says if the legislative mandate for the radio chips “becomes initially unattainable,” radio broadcasters would agree to an initial performance fee payment of 0.25% of net industry revenue, matching the current percentage of radio activated mobile devices in the U.S. Once market penetration of mobile devices with radio chips reached 75%, the broadcasters would agree to pay the full 1% of net industry revenue.

The conditions also call for reducing the streaming rates that broadcasters already pay for simulcasts and webcasts. If the mandate for a radio chip does not pass, that rate reduction would not take place until 50% of mobile phones have the radio chip.

The conditions also call for resolving outside the legislative process a dispute with the American Federation of Television & Radio Artists over the simulcast of over-the-air radio commercials on the Internet.

Another provision calls on MusicFirst to recognize “the unparalleled promotional value of terrestrial radio airplay.”

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