CEA Says Radio Chip Plan is ‘Poison Pill’ for Radio Royalties

HOLLYWOOD -- The effort by NAB and RIAA to mandate wireless devices be manufactured with an FM radio chip is a transparent “poison pill” intended to derail radio performance royalties, said CEA Senior Vice President Michael Petricone at the Digital Music West conference. CEA originally took no official position on the issue of radio royalties until the electronics industry was involved through the back door, he said.

Radio doesn’t see requiring analog FM tuners as their “Hail Mary pass,” Petricone said. “The thing is the radio broadcasters don’t want to pay performers. That’s why they did a crappy thing and put this provision in this draft settlement. They knew it would draw the tech industry in to potentially kill the entire bill.” The public should contact legislators to “get rid of this ridiculous FM mandate,” he said. “That is the prime impediment to getting this bill passed.”

The panelists generally agreed with the appeals court decision that found online downloads are not subject to a performance royalty. Lee Knife of the Digital Media Association said the ruling was important to put a legal distinction between broadcast radio and downloads: “The court got it right when it said no. Those two experiences are not one. They are two distinct activities that have two distinct rights with two distinct royalty formulas.” It’s time for terrestrial radio to be on a level playing field with online radio, Knife said. “DMA represents webcasters and we are happy to have terrestrial broadcasters brought into the tent as payers of royalties. It is unfair that only digital broadcasters have to pay a royalty."

John Rudolph, Bug Music CEO and NMPA board member, saw the court decision as an afterthought. “Nobody on our side saw it as a money making boon, just a clarification of what the rights were,” he said. “With the way the world is developing, I don’t think it’s a landmark case. Copyright is very technical legal issue so to me it was a matter of, let’s be clear up front so we can go forward.” There’s unprecedented cooperation on all sides of the music industry, Rudolph said. “What’s happened between the organization and commercial interests the last five years is dramatic,” he said. “There has never been a time like there is right now. People are coming in and want licenses to play by the rules and we are giving them licenses."

Petricone agreed, conditionally. “Deals are getting done and we're moving forward,” he said. “The music industry is larger than it ever has been before. There’s more money going into the ecosystem than ever before. The music industry at large is in fine shape. However, some of the more traditional players are having a hard time.” So is radio, Petricone said. “More and more younger people have moved to other platforms to discover music. I don’t know that broadcast radio will come back.”