The Performing Arts Battle between the Music Industry and Radio

For many months, the recording industry (music industry) has been lobbying Congress to enact legislation that would provide a performance royalty to artists (those who actually sing/play the music) from radio revenues.  The music industry has never had the votes yet to pass the legislation, but they keep trying.  There has been a lot of rhetoric on both sides about the issue, with radio claiming that the music industry benfits from free airplay and promotion, while the music industry points out that radio stations benefit from content and avoid paying a performance tax (whoops, I mean royalty) as in many other countries.

Surprisingly, the NAB Board has now brought forward a template for such a royalty, to be between .25 and 1% of radio revenues.  But there is a catch.  The royalty is tied to requiring that radio chips for FM and HD radio channels be required for mobile phones.  The radio industry has been after chips for mobile phones for some time, but the electronics industry and major phone makers are not interested.  And they probably won't be interested in this issue either.

Apparently, the NAB sees making concessions on the performance royalty critical to getting radio chips on mobile phones.  I probably don't get something, but to me these seem like mutually exclusive issues.  If I'm Apple, why do I care if there is an FM/HD chip on new versions of an iPhone?  Let the industry create an app for that (actually several already exist).  And if I am RIM or Nokia or another phone manufacturer, what do I get for putting this chip in the phone except for another cost?

And is anybody asking what consumers want?  Thousands of people are listening to Pandora and Internet radio on their phones every day instead of local radio.  They listen to these services because they have given up on radio and its repetitive, sounds the same in every market programming.  If consumers have a radio chip on their phone, how many are actually going to listen to local radio?  I get it if there is severe weather, or maybe a sporting event of a local nature I want to receive.  But just to listen to music?  That train has already left the station.

There are lots of issues here that are not resolved by this first step.  But this is a huge economic gamble for the NAB and the radio industry.  Giving away any revenue when you have been losing money for years in hopes of building more audiences online is a big risk.

Stay tuned.  This is far from over.