capital hillTraditional radio broadcasters have seen their world change substantially in the past five years. The introduction of satellite radio, iPods, MP3 players, Internet radio and cell phones capable of delivering audio content have stormed onto the scene and brought new challenges to an industry that was status quo for decades.

One distinct advantage traditional radio has enjoyed for many years is the fact that they pay no royalty for the music that they broadcast. The theory has been that the radio stations offer promotional value to the music industry, and that Record sales would increase due to that exposure. That theory has recently come under fire by the record labels, who in the face of all of the audio entertainment outlets have seen record sales tumble. Because of this, the recording industry is now seeking royalties from traditional radio.

The issue is contentious. Newer media outlets such as Internet radio and satellite radio pay royalties. One has to ask why these newer mediums are not receiving the same treatment, and allowed royalty free broadcasts. Also at the heart of this issue are the performers, who have long seen very small residuals (if any), from their performance of songs. In most cases, it is the writer who gets the larger checks, and performers who did not pen their own music get very little.

The National Association of Broadcasters has been fighting RIAA backed legislation that would bring royalties for traditional radio stations. Yesterday the NAB announced that 26 new members of the House of Representatives have joined the original 51 members who oppose the RIAA backed legislation. All 76 members have added their name to a Resolution.

The RIAA is in the midst of scrambling to find a way to recoup money in lost record sales. In many ways, both traditional radio and the RIAA themselves were simply not fast enough to see the speed at which emerging technologies would come to the market, and the broad acceptance of consumers for alternative methods of audio entertainment.

For followers of the satellite radio sector, the final arguments have been made to set satellite radio royalty rates. The decision rests in the hands of the panel that heard the case. That decision is expected by years end. The many moving parts of this issue can carry lasting impacts on how consumers get audio entertainment.

Position - Long Sirius, XM