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NAB Outlines Terms Of FM-Tuner Mandate

10/26/2010 01:03:31 PM Eastern
Washington - The joint board of directors of the National Association of Broadcasters (NAB) will vote this afternoon on a series of legislative proposals that it will offer to the music industry as part of a deal under which terrestrial radio stations will pay higher royalties for broadcasting music.

The proposals, approved yesterday by the NAB Radio Board, include a legislative mandate opposed by CEA and CTIA to add FM radio tuners to portable electronics such as portable media players (PMPs) and cellphones.

The legislative package is designed to forestall music-industry-backed proposals circulating in Congress to impose royalties that would be higher than those in NAB's package of proposals.

An FM tuner mandate, which NAB said has already been endorsed by music-industry lobbying group Musicfirst(Fairness in Radio Starting Today), is designed to encourage the music industry to lower its royalty-rate demands in return for potential access to more listeners through portable devices.

The NAB Radio Board stressed that its support for the package is conditioned on "all provisions" remaining part of any legislation. The package, once approved by the Joint Board, would be sent to Musicfirst, which was founded to get radio stations to pay royalties to musicians and music companies for the songs they broadcast. By law, terrestrial radio stations have paid royalties only to songwriters and music publishers. In contrast, new broadcast media such as satellite radio and webcasters have had to pay royalties to all of the groups.

The Radio Board said its proposals are the "culmination of more than a year of discussions and dialogue" among radio executives, the NAB, key members of Congress and MusicFirst.

"NAB remains 100 percent opposed to performance fee legislation pending in Congress," said NAB Radio Board Chair Caroline Beasley, CFO of Florida-based Beasley Broadcast Group. "However, in a good faith effort to resolve this issue in the best interests of both radio and the music industry, we have endorsed a solution ensuring that broadcasters have a foothold in digital platforms of tomorrow."

Besides a tuner mandate, the package includes "provisions that are essential to the future of free and local radio, and we're hopeful that the Muscifirst Coalition finds it in their best interest to say 'yes' to this proposal," Beasley said.

 The radio mandate includes "an acceptable phase-in period and inclusion of HD Radio chips when economically feasible." If a legislative mandate isn't passed, then radio broadcasters would agree to an initial performance-fee payment of 0.25 percent of net industry revenue. Once penetration of radio-equipped mobile devices "reaches and maintains a level of 75 percent of all mobile devices, broadcasters agree to pay the full one percent terrestrial transmission performance fee," the board said in a statement.

For its part, CEA said in a letter today to the NAB  that it will oppose a tuner mandate and doubts Congress will impose one. "We have yet to identify one member of Congress willing to support your attempt to impose old FM technology on new portable products."

  Other provisions include:

  •  eliminating the Copyright Royalty Board from setting royalty rates for transmitting music on-air or over the Internet.

  • resolving a dispute with the music industry without legislation to facilitate simulcasting of over-the-air radio commercials on the Internet;

  • Musicfirst's "acknowledgment and recognition of the unparalleled promotional value of terrestrial radio airplay;"

  • simplified airplay reporting requirements.

  • and, if a radio mandate is passed, reduced streaming rates that broadcasters pay for simulcasts, webcasts and other non-terrestrial transmissions of music through 2016. If a mandate isn't passed, the streaming-rate reduction would not take effect until 50 percent of mobile phones have radio chips.
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