Debate rages over mandatory FM in handhelds.
Although it grabbed headlines, the debate over requiring new handheld devices to include FM radios really represents just the very tiny tip of a monstrous iceberg. The real controversy rages deeper, in a place somewhere ugliness, greed, and aggressive political lobbying remain much more difficult to photograph. The heart of rock ‘n roll is still beatin’ in Cleveland, but it is on life-support, because broadcasters, politicians, and organizations representing musicians and songwriters cannot agree on royalties and revenues.
Right now, AM and FM radio stations pay no “performance royalties” to musicians and singers, but they do pay “mechanical royalties” to songwriters. The advent of satellite and internet radio upset a delicate equilibrium in broadcasting, creating a money-making opportunity for artists who were losing fortunes to illegal downloads and bit-stream torrents. Restoring a delicate balance, a panel of judges—politicians with tenure—set frighteningly high performance royalty rates for web-radio stations. Happy musicians. Unhappy broadcasters, who already were losing audiences and advertising revenues to commercial-free internet and broadband stations that simply increased their subscription fees to cover higher royalties. For listeners, a potentially fatal threat to broadcast radio, still most listeners’ player-of-choice in their cars.
Late last week, the National Association of Broadcasters introduced what they called “a compromise,” but which impressed most observers as an unnecessary complication. Paraphrasing the press release from the NAB, Reuters reported, “[Broadcast radio] Stations would pay, at most, 1 percent of their annual revenue, and those rates could no longer be ratcheted upwards by the same panel that tried to mug Webcasters. Stations would pay less to simulcast their content online and would be able to air the same commercials online and over the air.” The NAB, however, added a quirky codicil: The government would require mobile-phone manufacturers to include an FM receiver in every handset.
The keyword in the codicil: “require.” Members of the Consumer Electronics Association, trade group for cell phone makers, strenuously object to complicating their processes and raising their costs by mandating a feature most consumers say they do not want. Redraw the battle lines, therefore, to align major manufacturers and internet service providers against radio broadcasters, putting artists and musicians in the crossfire.
Congress will take-up debate on the issue during its brief fall session before mid-term elections.
