800.275.2840 MORE NEWS» insideradio.com THE MOST TRUSTED NEWS IN RADIO FRIDAY, JUNE 19, 2015 Performance royalty debate: You say you want a resolution. It’s been a busy six months on the royalty front since the 114th Congress convened in January. But radio industry efforts to derail royalty legislation are further along than they were at this point in the last Congress. Since the NAB-backed Local Radio Freedom Act was introduced on February 25, a total of 194 members of the House and 18 Senators have signed the non-binding resolution that opposes a broadcast royalty. That’s 55 more House members and seven more Senators than at this point in 2013. “Were driving toward that magic 218 number in the House ,” NAB EVP Dennis Wharton told Inside Radio, referring to the majority needed to block a royalty bill. “I think we’ll probably get there within the next month or two,” he added. “If you’re able to present to key members of Congress a majority of House members who are on record opposing a royalty, that’s a strong sign that there’s no reason to push it further.” The irrepressible issue has come up at several Capitol Hill hearings in a year marked by unrelenting lobbying on both sides. Broadcasters would like to avoid a reprise of 2009, when performance royalty legislation nearly became law after the Senate Judiciary Committee cleared the Performance Rights Act. Many hope that private deals struck by iHeartMedia, Entercom, Cox Media Group, Beasley and others with indie labels will prove the market can sort the issue out itself. But Warner Music Group is the only Big Three label group so far to ink a royalty pact. And nearly a year has passed since a royalty deal between a label and a radio company has been announced. Royalty proponents attempt to divide radio. The recording industry has a new tactic for winning a performance royalty: divide the radio industry. MusicFirst, the Washington, DC-based group that represents labels, artists and managers, is attempting to rally smaller radio stations to its side by pointing out how little they’d pay in royalties. Stations with annual billings of less than $1 million would pay only $500 per year for all terrestrial music airplay on their station, under the Fair Play Fair Pay Act, introduced in Congress in April with bipartisan support. Music First is trolling for stations to break rank with the NAB’s no-royalty position. In a letter sent to roughly 3,400 radio stations on June 10, executive director Ted Kalo told small station operators that radio’s largest companies “want you to believe that this proposal will put your station at risk, but that is just not true.” Trying to drive a wedge between large and small stations, Kalo wrote, “They know, and you should know too, that the fight for a performance right has never been about smaller stations.” MusicFirst claims 75% of music stations would pay $500 or less under the Act, which would end radio’s decades-long exemption from paying royalties to artists and labels [email protected] | 800.275.2840 PG 1 NEWS insideradio.com FRIDAY, JUNE 19, 2015 when it broadcasts their sound recordings. In an email to Inside Radio, Kalo said he has talked with “a number” of those who received his letter. “Most have been positive and welcome a continuing dialogue about preserving the viability of truly small stations and strengthening diversity of formats,” he said before taking the requisite slam at the NAB: “The days of NAB hiding behind small stations while it shills for its largest members are over.” NAB to radio: ‘Stand united.’ “Don’t let our opponents divide radio!” That was warning from the National Association of Broadcasters in response to a musicFirst letter attempting to woo small market radio stations to its side in the tempestuous radio royalty debate. In an advisory sent to member stations, the NAB urged all radio stations, regardless of size, to “stand united against this legislation and its transparent political carve-outs.” A performance royalty would, it said, “threaten the continued viability of free, local radio stations.” “We’re hoping our members don’t buy the line of reasoning that’s its only $500,” NAB EVP of communications Dennis Wharton told Inside Radio. “Once they get their hooks in, they’ll begin raising the amount.” The NAB argues that the Fair Play Fair Pay Act would provide a “disincentive” for small stations to grow their revenue, less they exceed the $1 million threshold, which would trigger higher rates set by the Copyright Royalty Board. They also note that the bill would take into account all of a station’s revenue, including revenue from station events, and would include administrative fees. A surge in agency interest in streaming radio. Advertising agencies are bullish about the radio business this year and are getting used to programmatic buying. That’s the top takeaway from a new STRATA survey. Consistent with strong interest in all things digital, 44% of the agencies surveyed say they’re more interested in streaming or online radio than they were a year ago. That’s a higher level of enthusiasm than spot TV (19%) gets, and at least within shouting distance of the streaming video fervor (65%). While just 11% say spot radio will be the focus of their ad campaigns, it’s up all the way from 3.2% a year ago. Still, 33% of the agencies report their interest in spot radio is less than it was a year ago. The STRATA survey indicates agencies are in a pretty bullish mood, with 53% thinking their business will grow this year. J.D. Miller, STRATA’s director of marketing, says that’s the highest mark of optimism since the question was first asked during the 2008 recession. More than four in ten (44%) respondents also think they’ll be hiring this year, which is a pretty good sign of expansion; Miller says the number is nearly a record in the history of this survey. The agencies are also getting used to programmatic buying, but they are definitely of two minds: 46% like the improved targeting programmatic gives them, but that same percentage also say they’re “still undecided” about whether programmatic buying properly executes the order. Perhaps the trepidation is best exhibited by another stat—the worst thing about programmatic for 22% of the respondents is its “complexity/newness.” For AudioHQ and Slacker, there’s no place like in-home. Radio listening in the home often includes connected devices, and digital audio rep firm AudioHQ is honing ways to deliver ads tailored to these listeners. Through a new program, AudioHQ will offer exclusive ad distribution for streaming audio accessed via devices such as connected TVs, Sonos wireless speaker systems, Roku streaming media players and game consoles. Online radio service Slacker will be the first to launch the program in Q4, and its in-home listeners will only hear ads sold by AudioHQ, which plans to offer the service to other webcasters in the future. “In-home listening presents a very compelling targeting opportunity for advertisers,” says AudioHQ CEO Matt Cutair. While cars and the workplace get the most attention for radio listening, in-home remains surprisingly strong. A recent survey by Edison Research found that among audio options—including owned music, streamed audio, podcasts, TV music channels and YouTube—more than half of all listening is done in the home, compared to 30% for in-car. Slacker listening data shows higher levels of listening via connected devices on nights and weekends, when Web and mobile listening declines. The move looks to be a win-win for Internet radio, which can target spots based on devices, as well as demographics and location. While AudioHQ has just begun to pitch advertisers for the program, Cultair says he expects broad interest among ad categories, particularly consumer packaged goods and retailers. Slacker radio offers subscription and ad-supported options. [email protected] | 800.275.2840 PG 2 NEWS insideradio.com FRIDAY, JUNE 19, 2015 News organizations get OK to test eyes in the sky. Six news organizations this week got government approval to research the use of drones in reporting. ABC, NBC, The New York Times, The Washington Post, the Associated Press and Reuters will be testing eyes in the skies. Sandy MacIntyre, AP’s vice president and director of global video, said the experimenting phase “will allow us to use these new tools safely and effectively while also benefiting from the many new angles of visual newsgathering,” according to CNN. The news organizations will work in partnership with Virginia Tech. Last month, CNN and the Federal Aviation Administration began researching the use of drones in news situations in which the drone is still within sight in urban populated areas. Eventually radio would share in the drone news delivery process, possibly replacing or augmenting traffic helicopters, and using drones for their own online video news features. On Thursday, Senators Dianne Feinstein (D-Calif.) and Charles Schumer (D-N.Y.) introduced the Consumer Drone Safety Act, which would cover safety and altitude restrictions on non-commercial use of drones. Feinstein in particular has had safety and privacy concerns that she says the bill addresses. NAB spokesman Dennis Wharton said the organization “strongly supports” the bill “that strikes the right balance by imposing meaningful guidelines on recreational use of Unmanned Aerial Vehicles.” He also said the NAB maintains drones “hold great potential in improving newsgathering capabilities at local stations.” The FAA hopes to have some approvals ready within a year for a variety of drone uses.