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It's Now Time for Radio to Pay Up!
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2003-04-10
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Considering the fiasco that was the CARP proceedings, the announcement that SoundExchange had reached an agreement over royalty rates with large commercial webcasters is clearly good news for an industry anxious to start collecting on a new revenue source. I feel that this opportunity, though, should also be taken to reexamine what has been a persistent anomaly in the royalty regime in the US: terrestrial radio broadcasters exemption from paying royalties to record labels & artists.

At the time, the logic was that since radio was such an important driver of recorded music sales, it was already contributing to labels and artists' primary revenue model. A requirement to pay artists & labels royalties it was argued would be akin to biting the hand that feeds you.

Irrespective of the argument's merits at the time, they no longer hold water in today's media marketplace. First, radio broadcasters no longer are the sole gatekeepers to the mass marketplace. MTV and its descendents from The Box to BET opened an entirely new platform for labels & artists to reach a significant segment of American households. The popularity of reality-shows like American Idol and their innumerable variants across the world illustrates broadcast TV's ability to successfully expose new talent to the masses. And who needs radio when you can pack theatres with movies like "8 Mile" or be discovered in shows like "Dawson's Creek."

Broadcast radio no longer even holds a monopoly as the sole audio platform with the growth of satellite, cable & Internet radio that, by the way, have royalty agreements with SoundExchange. And as terrestrial radio has increasingly concentrated in the hands of a few that centrally control the nation's playlists based on extensive "market research" studies, it has become a less reliable partner in helping the music industry break and promote new music that would help justify more releases and sales.

From this context, the exemption is not only depriving creators from fair compensation for the use of their works, but tilting the market in favor of media conglomerates over new competitors. How can this be justified when these same new competitors are a key justification for the FCC Chairman's position to severely relax, if not outright throw out, existing media ownership rules?

In this period of radical market transformation and an uncertain future for the music industry, it is time to eliminate the largest royalty loophole of all and for radio broadcasters to pay their fair share.

Related News from Mi2N:
» Soundexchange Reaches Agreement On Webcasting Rates And Terms, Avoids CARP


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