« Defending Randy Michaels | Main | The Politics Of Appeasement »

October 26, 2010


Eric Rhoads

Please note that I was never a business partner of Steve Mariott. -Eric Rhoads

Thomas Scott

What happened to Steve Marriot? I know Eric Rhodes was a business partner at one time in radio?

Pay Four Value

99% of most radio station's programing is MUSIC. So calling the fee broadcasters should pay for the use of that music a "tax" is misleading at best - more like manipulative and a lie. Tax is paid to the government. The royalities artists and labels want is for the use of their music (99% of radio's content) which is the primary driver behind the billions of dollars of radio station's profits. Music is radio's content just as television shows are TV's content. Everybody in TV gets paid everytime a TV show airs. But not in radio. When a song airs, the artist and label are not geting paid. Eric and his fat cat old time radio friends want their free ride to continue. Sorry time's up, its time to pay your fair share. Or, just play music not owned by the big four labels. Oops I guess there's not a lot of value (hits) in that music is there?

Bobby Caldwell

I don’t want to pay a performance tax and I am totally against it. But Eric, in response to your posting, I think we would be putting our businesses at risk if we don’t act. As a businessperson, you want to have as much input and say so into your future as possible. I do not want to put my fate in someone else’s hands and let them control my destiny.

A respected congressman who has supported broadcasters on every issue told me that we are going to lose this battle -- just like we lost the battle over satellite radio. Eric, another issue is mutual respect. We can all disagree, but we don’t have to be disagreeable. I want the broadcast industry to regain the respect and clout that we once enjoyed both in our industry and on Capitol Hill. With Gordon Smith’s leadership and the leadership of the industry, it is my firm belief that we will achieve this goal. Remember, the times they are “a'changin'.”

Bobby Caldwell
East Arkansas Broadcasters
NAB Radio Board Member for Arkansas and Tennessee


#4 ... happening now.
Northern Cancels NAB Membership Over Term Sheet



The NAB Board Members are serving only themselves, as investors in iBiquity - their game is to get HD Radio mandated onto cell phones so iBiquity can go IPO. The NAB has just thrown your industry under-the-bus. Any type of mandate will never happen as the CTIA and CEA are firmly agsinst such mandates. At leaset, the NAB has finally shown their true intentions.

George G. Beasley

The following remarks are made with full disclosure that my daughter, Caroline Beasley, currently serves as the NAB Radio chair. I assure you that my support of the NAB’s recent actions remains steadfast whether or not my Company is represented on NAB’s Board.

This next year marks my 50th year in this tremendous business of Radio. The matter of whether or not to pay royalties has been bantered back and forth for a majority of these years. As I view the scenario currently facing our industry, I applaud the NAB Board for striving to resolve this contentious issue once and for all.

In his role as a former Senator, I respect Gordon Smith’s experience and value his knowledgeable advice as to how royalty payments will be played out in Congress. Can our business really afford to gamble on the ramifications Radio would endure? It’s a given that the RIAA will continue to push broadcasters towards paying royalties, and as time moves on they will most likely become more gluttonous.

Isn’t it preferable to end this persistent battle and isn’t it prudent to possess financial certainty with regard to royalties as we continue to develop our business models? A set rate, which cannot be altered unless both sides agree, and the permanent removal of the Copyright Royalty Board will do just that.

We should not dilute the vital role broadcasters play in our communities by airing our internal friction. Varying opinions are healthy, and sharing of ideas essential, as we confront such an important issue. But at the end of the day, we do a disservice to listeners, advertisers, communities and to Radio if we do not stand united. The discord within the industry that I love so much, truly saddens me.

George G. Beasley
Chairman and CEO
Beasley Broadcast Group, Inc.

Greg (HDRadioFarce)

It looks like musicFIRST has rejected these offers, anyway:


Did someone mention an iBiquity IPO, NAB Board Members? Good work, NAB, now you've got the CEA pissed at you - LOL!

JP Ferraro

Oh, I think royalties are a great idea! (personally I don't think I pay ASCAP and BMI enough!) Why just stop with the record companies? How about royalties for:
a. The engineers who tune up and repair the recording studios.
b. The guys who deliver the pizza.
c. The pilots/engineers/drivers who transported the musicians to the studio.
d. The studio cleaning crew.
e. The folks who run the hotels where the musicians stay.
f. The pimps who supply the "entertainment"
g. The folks who supply the booze and other drugs.
h. The manufacturers of the recording equipment and media.

I sure hope that I did not leave anyone out.
I feel so guilty knowing that radio contributes absolutely nothing to music sales, yet we get a free ride. As to why we still have instances of payola, I just can not explain it. Someone ought to tell those record company execs that they are wasting their money.

I've got the solution! Radio should turn over all its income to the music industry. The music industry could then return to us what they think we deserve.

Peter Smyth


I've always respected you and your passion for radio, but your suggestion that Gordon Smith and the NAB Board are not operating in the best interest of radio is entirely off base. Gordon is a remarkable leader who has re-framed the performance fee debate to radio's strengths. No longer is radio seen as 'The House of No' by so many lawmakers and policymakers in Washington who have the ability to make or break our business with new laws and regulations. Instead, NAB is now viewed as an approachable and pragmatic organization interested in solutions that position our business for a stronger future. That's a reputation we should welcome.

There is no doubt in my mind that NAB, under the leadership of Gordon, could defeat the Performance Rights Act in this Congress and in the next several Congresses. But at what expense? So long as NAB is perceived to be unwilling to negotiate in good faith on an issue so important to key members of Congress, the long knives will be out for our business. That could mean a more onerous license renewal process, spectrum taxes, fewer interference protections, or any number of Washington-knows-best policies. And after all that, we may still face a day when Congress ultimately passes a performance royalty bill, a bill that would likely be much harsher for radio than the deal we're looking at today. After all, Marci Ryvicker, a respected financial analyst from Wachovia-Wells Fargo, pegged the cost burden of the currently proposed legislation at between $2-7 billion annually. With a price tag like that, $25-100 million seems a little easier to accept when you factor in the offsetting conditions that we have insisted be part of any "legislative solution."

While I do not relish in the idea of paying even this limited amount to the record labels, I support this proposal for three reasons: 1) it provides immediate certainty for my radio stations; 2) it prevents the Copyright Royalty Board from applying outlandish royalties on both my terrestrial broadcasts and Internet streams; and 3) it provides radio with a strong digital platform, both on the Internet and on mobile phones, that can offset the performance fees incurred by our stations.

Eric, you are a great evangelist for radio and produce one of the most respected publications in our business, however, on this particular issue, I respectfully disagree with you.


Peter Smyth
Chairman & CEO
Greater Media, Inc.


Your article is perfect, Eric. I have contacted my NAB Board member and told him I am totally against this and am considering dropping my membership if this is how they're going to perform. We spent money to come to Washington to get support from all of our legislators to oppose this and then NAB decides to negotiate..What does that do to our credibility? As a micro-market owner I can assure you this will hurt us in the worst way. And we have nothing to bargain with, since payola is illegal.

Jeri George

In this day and age, artists don't need record companies, but they do need radio to expose their music, even if they are an established artist. If radio stations would start soliciting music from any artist without a record company, with a sound that fit their format, and started promoting these artists and their websites so they could sell their own music...they might get the attention of the big artists fighting for the performance tax. Then when the tax goes through, drop artists from their format with a record company and go into the business of new music by unknowns who can sell their own music on the internet...turning them into the big artists of the future. Established artists with record companies would get little airplay and this would have a big impact on their new album sales. Then maybe the big artists would decide that they don't need a record company. It's time to fight back and take out the middle man.

Greg Jablonski

Eric, I have never so completely agreed with you -- your analysis is comprehensive and on the money. This mess is a lose-lose for both the radio and music industries, and the NAB is the catalyst. It seems they are writing the last chapter in the book they started ten years ago by botching the DMCA streaming rights issue.

Rick Charles


The best thing you've ever written. This is madness.

Tim Johnston

Dear Eric, It does not take a rocket scientist to figure out that your predictions and opinions are exactly right....I am not saying that you are not smart.... but it seems that the NAB (and John Beck) have not been able to figure out the obvious.

How about using your forum to post a survey to the radio stations about how we feel re this royalty scam and the NAB's involvement in it.

Eric Rhoads

Johns points are valuable and the most important part of this is a dialogue. No doubt the PRA is a bad idea.
And there are many highly respected board members indeed, not weak people at all, though I disagree with this strategy it may indeed be the only alternative, though I dont believe so.

Tom Darrah (aka Daren)

Maybe we should think about having stations charge record labels for airplay. A three minute record would cost three times the station's sixty-second spot rate.


John R. Beck, Jr.

From John R. Beck, Sr. Vice President & Market Manager of Emmis Radio St. Louis

NAB Board Rep for Missouri & Kansas

Eric has years of service reporting on our industry and I respect him. But on this subject I couldn’t disagree with him more. I have a much more optimistic point of view than Eric’s scary, screeching Halloween parade of horrors.

Last year both judiciary committees passed bills that would give the Recording Industry a royalty tax on the music that we play on the radio. This action means that powerful people in congress want us to pay a royalty of up to 8% to the recording industry.

Against this background consider NAB President & CEO Gordon Smith. Senator Smith, in my view is a true blessing to our industry. At a time of maximum peril from congress we have the perfect leader. Gordon is a respected recent former member of the United States Senate. ‘a true gentleman who is respected on both sides of the isle. He brings understanding of our business to members of congress and an intimate understanding of how congress operates to us. Gordon Smith’s advice & council is invaluable --- especially now! Eric is wrong to indicate that Gordon is an outsider. Gordon is an insider for what we in free radio and television need right now and for the foreseeable future.

The NAB Radio Board is very strong Go to nab.org and look at the list of members. Some are owners of big companies & there is nothing wrong with that? They have so much more to lose if radio suffers. Most board members are radio stations owners, big & small market broadcasters who have skin in the game. It’s sad that Eric suggests that the board is weak as they make a bold proposal that could strengthen our industry and keep it relevant for years to come.

On the issue of the PRA (Performer’s Right’s Act) We have been fighting this issue in congress for the past 7 years and we continue to beat it.

We all agree that the record companies benefit tremendously from free airplay on our platform. The gold records in all of our stations are proof as to how much the record industry values free airplay on the radio. We are all totally against paying the record companies and against the PRA. All of us will continue to fight the PRA with all that we have and hopefully we will continue to win. You must know that the record industry will not stop trying.

For a variety of reasons right now we are at a very special moment in time that presents us with a choice:

1. Keep fighting the PRA year after year.

2. Discuss a deal where we pay a little, reduce streaming costs, reduce steaming hassle and move our service onto millions of mobile devices. Also, and very importantly, the record industry stops the fight thereby removing a potential threat.

Think of the scenario. We have a path to radio on the cell phone platform, we pay less to be on the streaming platform, streaming is less of a hassle and we don’t have to fight the PRA anymore. The Recording industry could actually be on our side advocating for the cell phone chip. Separately, it would take us years to accomplish these goals, if ever.
This would allow us time to fight the real looming threats, which I believe are broadband and on line competition.

I am very proud of the leadership that we have at the NAB through Gordon Smith, Chairman Steve Newberry and Radio Chair Caroline Beasley. I ask you all to consider my much happier point of view on this issue.

John Beck

Greg (HDRadioFarce)

Nice of Eric to remove my comment. Yup, it is all about the NAB, as investors in iBiquity, to throw your industry under the bus to get HD Radio mandated onto cell phones. Good-luck though, with the CTIA nad CEA firmly against any mandate.

Trey Stafford

Amen Eric. The NAB members DO NOT support this. I suggested to my NAB rep a member vote. This is that serious an issue.

Bayard H Walters

The elements that have appeal to me are: 1) the elimination of the Copyright Royalty Board in any future rate setting and 2) AFTRA
not being an issue for streaming.
The CRB has set rates at very high
levels for others and can be expected to do so for radio if a bill does pass that does not exclude the CRB. AFTRA is the reason some small stations do not stream. Eliminating commercials is a major hassle. In the future, most broadcasters will want to be received on all audio devices and that will include those that pick up the web and
wi-fi. Radio receivers will eventually make it to cell phones, though that industry is opposed. Truth is, in an emergency a radio in a cell phone could be a life saving device.

We/I do not want to pay a Performers Royalty of any kind. I doubt that the RIAA will be able to deliver on the conditions to which they agreed. If not, the battle will continue. If in the futue a bill passed by Congress does not eliminate rates set by CRB and there is no AFTRA agreement, some will say
"why didn't we consider the deal
in 2010". By that time it will be
too late and the price much higher with no tit for tat.

I do see value in not having the CRB in our business and in getting
AFTRA out of the way. That does
not negate the arguments of other
commentors, but it is how I see it.

Bayard H. Walters, Preident
Cromwell Group, Inc


I'm with Eric. All they really want today is a foot in the door. Looks like they've got it. I run a small AM station in the midwest that is talk radio 23 out of 24 hours already, few people listen to AM radio for music. I still pay the music royalties to BMI, SESAC, and ASCAP and now another is coming. THANKS NAB...You really screwed the pooch on this one.

Jerry Smith

Farm Fresh cuts to the chase above. Eric, you've got a great insight into the NAB's abuse of its power brokerage with royal fees. But this is precisely the same cultural codes endorsing digital radio have given us all of the past 15 years.
We're cooking our golden goose like there are more of them available at the store. When will you guys, who have endured the world of bad radio broadcasting the past 30 years wake up, smell the coffee, repent for your dead works and scream out loud,'I'm enlightened and I'm not gonna take this any more!"
We've had a non-broadcast supportive NAB since 1946. The claimed accomplishments are frauds. De-regulation was 20 years too late and not replaced with anything promoting quality control in the tech world. AND NOT one percent of the Broadcast World has battled or attempted to lure the auto radio market into delivering FIRST AM and now FM Radios that can support reasonable audio quality. In case techs any where to actually audio proof-test-measure these 'today's radios' the results would not have enough peak voltage to shock a duck in salt water. Basically the last 20 years have killed off the last of the decent receivers that could have made fundamental analog the best source of quality entertainment.
We now have digital displays (just like the cell phones and the IPODs) but we have audio that is just as poor as these 'alternative sources' but not better as basic analog could have provided for years to come and without costing us our marketing and promotional budgets to pay our dues and make the digital transformation to trashy nasty digital audio. Oh, you'll say but its 'quiet and noise free' but that means nothing when the highest transient quality is about 5khz on a good day (and that is one FM BTW).
Better broadcasting might belong to the next generation who are around to pick up the pieces and discover the lost scrolls and contests-playlists and nicotine smelling back rooms of the abandoned buildings around America where the few the proud once stood.
Upward and Onward!


This indeed is insane for the NAB to even propose compromise when we had significant opposition to this concept. I can't see this having a dramatic effect on big markets but the small ma&pa operations that bring local information and entertainment to a good share of America cannot afford to lose 1% or even .25% of their revenue.

Al Sergi


Could not agree with you more. My suggestion has been all along for radio groups to start up our own recording labels, we'll gurantee performers airplay, promote their concerts, make them stars and rich! My other concern is that just about all new Country songs mention "name brands" in songs, like Chevy, Bud, Exxon,etc. I have a list of over 25 songs, all mostly new. This product placement is making someone money. How about we charge labels for sneaking in all these FREE commercials? Something is wrong at the NAB. Radio has the power to investigate, report, change opinions, etc. we should be flexing our power to influence the public and kill this threat once and for all. Why hasn't the NAB forced some senator's hand to introduce legislation that spells it out. "NO TAX OR FEE CAN BE IMPOSED ON ANY FEDERALLY LICENSED RADIO STATION" this way we can get rid of this royalty threat once and for all.

Bill Lusby

I think that the songwriters should be responsible for paying the performers. It’s like a restaurant…The waitress or waiters make the tips and they tip-out the buss-boy. Of course, that would never happen even though it makes sense. How would the piece of music be heard if it wasn’t performed? The writer would never see a dime. The recording artist that gets played the most gets the most tips from the writer.

Tom Yates - The Coast KOZT-FM

Eric...Great piece...thanks. Just hoping that radio at large realizes what a slippery slope we;'re about to hit.

Alan Burton

I disagree totally and have posted my response to the NAB. Why did we spend so much time and effort in congress, which was very successful, to cave in. And this talk of phone chips is of little value when balanced against the certainty of the monthly tax we will be forced to pay. With a new congress that would likely be pro radio almost a certainty why would the NAB board cave in. I agree this has a bad order. If the NAB thought they have seen falling membership in the past, they're not going to believe what's going to happen after this hits.

Melissa Kunde

Personally, I think record labels and artists should be happy commercial radio is a generous benefactor in promoting their music. Every time a song plays across the country that song is a repeated advertisement for everyone behind the song. We make artist legends and that is why the Eagles or the Beatles still stay relevant and Lady Gaga could main stream her digital hwy appeal to the masses.

If we have to pay to play then I think Radio should be able to get a piece of the song download action. All station across the country could really make some serious revenue if we got the same percentage for simulating new and maintaining song awareness. I find it absurd that everyone wants to take from a FREE to the public medium. I don't see record labels or artists spending big dollars scrambling to keep radio advertisers on the air. After all if is wasn't for our sales troops out in the trenches looking for advertisers to support free music stations this debate would have never made the negotiation table.

This is absurd.

Chip Morgan


Why the Hell would radio want to be in cell phones? I have NEVER understood this concept. It is as crazy as supporting performance royalties. Has nobody else realized that training audience to listen to radio on cellphones is just a slick way to teach listeners that they don't need a radio? Are we THAT stupid? Once people use cellphones for "radio" there IS no radio.

- Chip Morgan, Farm Fresh Radio - Burlington, Vermont

tom dobrez

I concur that the timing of this maneuver is very curious. What do we have to lose by waiting two weeks for election results. This is a poor negotiation trick from people that are hired to be much better.
I hope my little radio stations can afford to keep playing music.

The comments to this entry are closed.

Become a Fan