800.275.2840 MORE NEWS» insideradio.com THE MOST TRUSTED NEWS IN RADIO FRIDAY, JULY 24, 2015 Voltair Stations Say ‘We’re Keeping It.’ Despite Nielsen’s plans to update its PPM encoders, programmers at Voltair-equipped stations say they have no plans to unplug the infamous audio processor any time soon. “I question whether anybody will turn their Voltair off—even after Nielsen puts its enhancements in place,” says one programmer at a station that is said to be using one. “Nobody wants to lose anything.” Speaking anonymously, numerous programmers have claimed to see ratings gains after plugging in the mystery box, which is said to increase the likelihood of Nielsen’s audio watermarks being received by its ratings meters. On Tuesday, Nielsen said it would increase PPM code density and amplification in the fourth quarter as part of its continuous improvement initiative. But in a ratings-compressed market, where even a minor increase or decrease in ratings can have a significant impact on revenue, stations appear reluctant to part with their $15,000 Voltair investment. “I don’t think anyone wants to be left on the sidelines when there is two-tenths to a half share on the table that potentially isn’t being picked up,” the programmer said. “I see the issue as unchanged.” The Voltair code-altering setting can be set as high as 24. Programmers who share their own sort of Voltair best practices say they set it at 20 to get the encoding benefits without introducing what Nielsen has termed “audible artifacts.” “A setting of 20 seems to be the consensus point in the industry,” the programmer said, adding that Nielsen Audio predecessor Arbitron set watermark density and amplification levels at a modest level. “It was conservatively set when PPM first came out and nobody did anything until [25-Seven Systems] started rolling Voltair out,” the programmer said. “Then the hood got lifted and that’s where it became a headache for Nielsen.” Orban Disputes Voltair Claims vs. Nielsen. Voltair manufacturer 25-Seven Systems has positioned the product as an “audio processor” but it does more than just make a station’s audio sound loud and crisp. Nielsen went so far as to claim it “interferes” with the encoding process of its proprietary PPM technology and introduces “audible artifacts” that disrupt the listening experience. Now a well-known competitor to 25-Seven Systems in the audio processing space is echoing that sentiment. Orban, which manufactures the widely used Otimod audio processor, is drawing a line in the sand between audio processing that “increases the opportunity of the Nielsen encoder to insert audibly undetectable watermark tones,” which the company says its processors do, and processing “that directly manipulates the level of the watermark, potentially breaking [the] Nielsen psychoacoustic masking model and allowing the tones to become audible.” On Tuesday Nielsen presented lab results that suggest that the Voltair, when dialed up to a maximum level, can degrade audio quality. “In an environment where traditional radio is suffering ever-increasing competition from new media, we believe that it is unwise for radio to degrade its audio in an internecine battle whose ultimate winner could be non-broadcast providers,” Orban said in a press release. The company says it’s putting its faith in Nielsen to make any needed improvements to its encoding system and says it won’t add processing to Optimods that “directly manipulates the Nielsen watermark signal because we expect that any such effort would degrade audio quality and would soon be rendered obsolete by Nielsen’s encoder improvements.” Orban notes its Optimod processors are compatible with Voltair but urges “caution” when the two are used together. Radio, SESAC In Historic Fee Settlement. The Radio Music Licensing Committee has reached a settlement with SESAC that ends almost three years of antitrust litigation brought by RMLC against the performance-rights organization. It’s also an historic agreement: For the first time in SESAC’s 85-year history, the licensing fees it’ll receive from radio stations will be determined by a third-party arbitration panel. “It’s the first light at the end of the tunnel in terms of getting us the ability to achieve some sort of sustained fee relief for the industry from SESAC,” said Bill Velez, executive director of the RMLC, which represents the vast majority of commercial radio stations in the U.S. The RMLC sought government consent decrees that would have regulated SESAC’s rate- [email protected] | 800.275.2840 PG 1 NEWS insideradio.com FRIDAY, JULY 24, 2015 setting process in a manner similar to those that govern BMI and ASCAP, the two dominant songwriter organizations. Unable to get the Justice Department to open a formal investigation, it filed an antitrust complaint in the U.S. District Court for the Eastern District of Pennsylvania in October 2012, alleging anticompetitive behavior on the part of SESAC, which represents 400,000 songs on behalf of 30,000 members, including those by Bob Dylan, Mumford & Sons, Lady Antebellum and Nirvana. Velez says that even if the RMLC prevailed in court, “We knew going in that we could not get the consent decrees as a remedy, that the best we would be able to achieve was binding arbitration.” The settlement sets the stage for the radio industry and SESAC to begin voluntary negotiations on new rates starting in the spring. If the two parties can’t agree by the end of next year, they’ll begin binding arbitration in the first quarter of 2017. The new rates would be retroactive and cover the period from 2016-2018. RMLC, SESAC Set To Talk the Talk. The courtroom action between the Radio Music Licensing Committee and SESAC is finally over after years of back-and-forth shouting and disagreements. Now comes the hard part—the negotiating on new rates is about to begin, and reaching a voluntary agreement won’t be easy. The two sides have been at odds over what the radio industry has characterized as excessively high rates. Broadcasters have testified that they paid SESAC as much in licensing fees as they paid to ASCAP and BMI, which are believed to control as much as 90%-95% of the market. There have also been accusations of hard-nosed tactics by SESAC. A central argument to RMLC’s case was that SESAC forced stations to buy its license or risk copyright fines as high as $150,000 per infringement—without knowing whether or not they were playing SESAC-controlled songs. The settlement will make it easier for stations to know what songs are in SESAC’s repertory. It also requires “much more stringent notice” for SESAC before making an infringement claim, limiting them to songs that have been posted to its website for at least 45 days. The negotiations could change the way SESAC rates are determined to a percentage of station revenue rather than the current system that takes into account a station’s market population and its highest one-minute commercial rate. SESAC has also made a good faith commitment to transition by 2016, its current three separate license structures for over-the-air, HD Radio and streaming into a single license, the way BMI and ASCAP do. Despite the animosity that has divided them, RMLC executive director Bill Velez says he’s encouraged by SESAC’s settlement with both the radio and TV industries under John Josephson, who took over as CEO one year ago. “Perhaps everybody is ready to turn the page here and try harder to make this relationship work,” Velez says. It’s Settled—For Now: Find out what SESAC has actually agreed to do in the settlement, at InsideRadio.com. Youth Still Sold On Radio and TV Ads. A new study bucks conventional wisdom that traditional media has trouble connecting with younger consumers. According to Nielsen’s Global New Product Innovation Survey for Q1 2015, digitally savvy generation Z (ages 15-20) and millennials (ages 21-34) actually use some traditional ad vehicles as sources for new product information as much as—or more than—older demos. For instance, millennials and gen-Z consumers cite TV and radio as sources at similar levels as their generation X (ages 35-49) and baby boomer (ages 50-64) counterparts. Also notable, these two younger groups are more inclined to use outdoor ads, public transportation ads and event advertising to learn about new products. As more radio stations host concerts and other live events, these place-based ads can be another way for radio to reach younger audiences with both station messages and clients’ brands. As expected, younger consumers are most likely to rely on digital ad sources, including Internet ads and video-sharing websites, while older consumers give more attention to traditional print ads sources, including newspapers, magazines and direct mail. Also in the study, Nielsen noted that globally, shoppers’ reliance on earned media is growing, while some paid media sources are on the decline. Social media postings and Internet searches are both growing sources of earned media. Comparing data from Q1 2015 to Q3 2012, Nielsen found that among paid media categories, TV ads are still the largest source with 52% share, although it dropped 11% from 2012. Internet ads, including pop-ups and banners, grew 1% to a 26% share, while video sharing climbed 1% to a 9% stake. Radio and outdoor ads both declined 3%, with radio down to a 10% share and outdoor slipping to a 15% stake. Scripps ‘Casts Its Lot With Midroll. The E.W. Scripps Co. on Wednesday acquired Los Angeles-based Midroll Media, which operates the country’s largest podcast sponsorship network and has a roster of top-flight shows such as “WTF With Marc Maron,” “The Nerdist,” Dan Savage’s “Savage Lovecast” and podcast networks Earwolf and Wolden.