Why Radio should worry and worry hard about higher streaming rates

An interesting take on dramatically higher proposed Internet streaming rates in Inside Radio, which features the headline: “Commercial broadcasters appear less worried about the higher streaming fees.”

This, of course, is wrong. It’s simply that commercial broadcasters don’t yet understand the long-term implications of those higher fees to the radio industry at large.

Inside Radio quotes Emmis VP of integrated sales Deborah Esayian as saying that streaming is “a tactic within a whole bunch of tactics” – including podcasting, online video and text messaging.

This, of course, is correct. But the rise of all new media elements should not be interpreted as diminishing any one of them – especially when streaming’s full importance and value has yet to be realized, let alone monetized.

We have only begun to witness the effect of streaming on audiences, I promise you. And any radio station must understand this if it intends to be relevant for future audiences.

“Right now,” says Inside Radio, “Emmis isn’t planning on appealing the CRB’s decision. Though it’s leaving the door open to joining a broader industry effort.”

And I suspect that broader industry effort will fail to materialize because broadcasters don’t understand what’s coming next.

So what is coming next?

Just ask Soundexchange’s John Simpson, because his comments are on the record. What’s shaping up will be an odd alliance of small webcasters and the recording industry on one key issue:

Where webcasters and the recording industry do agree is on the unfairness of making tiny Web stations pay for performance rights while huge radio companies pay nothing. Congress decided that Web stations must pay royalties to the composers of each song and to the performers and record labels, even as traditional AM and FM broadcasters continue paying only the composers — a quirk in the law that gives broadcast radio a huge advantage. Simson agrees that “there’s really no justification for broadcast radio not paying, and we’re going to try to address that.”

In case you missed it, let me repeat it for emphasis: The music industry is going to mount an effort for you, the radio industry, to pay royalties you have not previously had to pay. This is one way to make the higher streaming rates “fair” for all.

From the music industry’s perspective, this is certainly equitable and perhaps even overdue. After all, if you can’t get paid by the folks who consume (or steal) your music, make up the difference from the publicly traded companies for whom your content is their lifeblood. And that’s you, radio industry. From a licensing standpoint this makes all the sense in the world. It would sure be my strategy if I were them.

So the fact that radio’s lobbying arm, the NAB, is “disappointed” with the proposed streaming rates is like your neighbor saying he’s “disappointed” his dog just dug up your flower bed. So what? The dog is coming back for more.

And next time he’s taking a dump on your doorstep.

Don’t get “disappointed,” get off your ass and do something.

This is a much bigger issue than any broadcaster has thus far acknowledged. And the hearts and minds of the audience and the lawmakers will be with the labels and against the radio industry on this fundamental issue of fairness, because higher rates are fairer if they’re equally distributed.

Just wait and see.

The ball’s in your court, NAB.

[For some of the best and most comprehensive coverage of this issue (especially from the webcaster’s perspective) with far deeper knowledge and insight than I could ever muster, check out Kurt Hanson’s website]

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