new-nab-logo.gifThe National Association of Broadcasters has been busy with battles on many differing fronts. Their battle against the satellite radio merger is one of these battles, but perhaps their bigger battle is with the RIAA and a proposal that would have terrestrial radio paying music royalties.

The latest grenade tossed by the NAB was aimed squarely at universal Music Group for "cheating" artists such as Benny Goodman and Count Basie out of $6 Million in royalties. Dennis Wharton of the NAB cited the newly filed $6 Million dollar lawsuit filed against UMG on that very subject.

The NAB argues that artists get exposure through airplay on terrestrial radio, and thus they should be exempt from having to pay royalties. They call it a $7 Billion annual tax on radio.

Satellite radio sector watchers may look at this issue with mixed emotions. On one hand, Sirius and XM are giving exposure as well, and being commercial free, are perhaps giving artists MORE exposure than does terrestrial. On the other hand, the royalties satellite radio pays are quite expensive, and the structure of the deal somewhat cumbersome. Should artists receive royalties from terrestrial radio? That is the magic question. Are consumers getting exposed to new music from other venues? You bet they are, and therein is the problem facing terrestrial radio. It is legislation that keeps the "no-royalty" system in place, and it can be legislation that takes it away.

In my opinion, the business model of terrestrial radio is antiquated. They have run far to long without a threat, and have not responded well to the emergence of new technology. Terrestrial radio listeners complain about how much advertising is happening, and complain about homogenized playlists that are repetitive and lack local personality.

Status quo is not the answer. The question is whether terrestrial radio as a whole recognizes this.