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Traditional radio battles in new tech age

As tech companies seek to expand their reach and influence, radio stations continue to fight for their own future.

During the broadcast industry’s annual Las Vegas conference that ended April 21, National Association of Broadcasters (NAB) CEO Gordon Smith spoke of the need to remain accessible to consumers, including through the automobile.

“We must and we will continue to retain our rightful place in the automobile, offering not just the radio everyone knows, loves, and expects, but, also providing our interactive experience for those listeners who desire it,” said
Smith, head of the industry trade group for both broadcast radio and television.

Newer smartphone models come equipped with FM radios that consumers can use to listen to local stations over traditional airwaves instead of streaming content over a broadband data connection. But the automobile industry’s efforts to revitalize itself following a near implosion in 2008 has also made it a ripe space for wireless providers, device makers, and content companies to exploit - an observation that has not gone unnoticed by traditional broadcasters.

A key insight published in 2015 by accounting firm PricewaterhouseCoopers (PwC) found that in-car content choices now available to consumers through interactive dashboards is concerning to broadcasters. “Broadcasters have some time to prepare before such features become mainstream, but broadcasters’ revenue could migrate to other online media offerings,”  PwC warned.

Broadcasters are already seeing a revenue loss. The Radio Advertising Bureau, a member organization for the U.S. radio industry, revealed in March that the U.S. commercial radio industry took in $17.37 billion in advertising revenue during 2015, a 19.2 percent drop from the $21.5 billion generated in 2005.

The development of connected and autonomous vehicles is converging with the content and platform wars of the online, TV and radio worlds. Smith’s own language mirrors what consumers have come to expect from tech giants, such as Google, Facebook, Apple and Microsoft, as well as  online streaming services, such as Pandora, Spotify, and Netflix.

NAB has also been busy in the U.S. capital over the past couple of years rallying lawmaker opposition against having to pay new royalties for songs played over AM/FM radio. Currently, local radio stations don’t pay any royalties to recording artists.

The industry argues that imposing new costs of doing business on smaller radio stations likely will be more harmful to station owners and consumers alike, and a majority of Congress is currently on-board. While a bill has yet to be formally introduced in either chamber, as of April 14, 229 lawmakers in the House and 26 senators had voiced their bipartisan support in concurrent resolutions for the NAB’s Local Radio Freedom Act should it finally manifest.

The measure opposes “any new performance fee, tax, royalty or other charge” on local radio stations.

The music recording industry’s musicFIRST coalition is fighting back with its own bill, the Fair Play Fair Pay Act, which would expand federal copyright law to require traditional AM/FM broadcast radio to pay royalties to the sound recording’s copyright owners and musicians.

The bill, according to the coalition’s site, also puts a cap on the royalties paid by small local AM/FM radio stations. Stations that earn less than $1 million in annual revenue would only pay $500 a year, while “[public], college and other noncommercial stations would pay only $100 a year.”  The bill exempts religious and talk radio, and “incidental" use of music. 

Similar to how other communications technology industries — phone and Internet, television and cable, and now social networks and streaming companies — have argued that their services are vital to the public, so too has the radio industry.  

NAB launched a website in February showcasing its Congressional PSA Campaign — an initiative started in 1985 in which local radio stations donate air time during off-election years for politicians to make public service announcements. Hosted and produced by NAB’s Public Service Division, members of Congress and their families record 30-second radio and TV spots addressing various issues affecting community.

The topics for the 2015 Congressional PSA campaign — in which a record 307 members of Congress and their families participated — included job support for returning troops, mental health awareness, and emergency preparedness. The program ended last Dec. 15.

In June, 2014, Politico ran a piece questioning whether the program benefits politicians in other ways, noticing an overlap in member participation in the program and support for the Local Radio Freedom Act.

Dennis Wharton, NAB’s executive director, however, disputes the idea that the program serves to benefit political programs of members of Congress. Wharton recently told AMI Newswire  that not only is the air time donated by local stations, but the program does not run during election season so as not to be misconstrued as favoring one politician over another. 

 Radio is not alone in donating resources to politicians in the name of public service. Facebook, Google, and Twitter, for example, are ad-supported communications platforms that give their users free global reach. The cable industry  produces C-SPAN as a public service. And even news media provides free column inches and airtime to candidates by way of op-eds and interviews.  But, nowadays, with campaign season seeming to never end, the distinction between on and off-years is blurring. 

 “We think it’s a good program that gets pro-social messages back to the community,” Wharton said.