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Music Royalty Negotiations Shift to FM Radio in Mobile Phones

By Jason Ankeny

The Consumer Electronics Association is lashing out at a proposal from the Recording Industry Association of America and the National Association of Broadcasters that would mandate mobile device manufacturers to integrate FM radio chips into all wireless phones manufactured and sold in the U.S.

The proposal is the latest chapter in a long-running dispute between terrestrial radio broadcasters and the recording industry over music royalties, with the NAB battling the RIAA's push to require radio stations to pay labels and performers for the right to broadcast their songs. Existing U.S. laws demand radio stations pay royalties to songwriters, but not labels or artists--broadcasters contend that radio airplay provides free promotion and drives music purchases and concert ticket sales, but with CD sales in steep decline, the RIAA is exploring new revenue alternatives.

Although both the U.S. House of Representatives and Senate Judiciary Committees have passed bills that would award labels and artists a share of radio advertising revenues generated by playing their music, legislation has stalled in the face of overwhelming opposition from the NAB.

Broadcasters, looking to expand their audience reach, have now proposed a new settlement, agreeing to pay the RIAA around $100 million in annual royalties on the condition that lawmakers mandate the inclusion of FM radio chips in mobile phones and other portable devices. Congress is expected to act on the proposal sometime this fall. "Nothing is locked down just yet, but we're on the precipice of an historic breakthrough," RIAA chairman and CEO Mitch Bainwol told the Associated Press.

"This is two old-media industries attacking the new wireless broadband industry," said Consumers Electronics Association head Gary Shapiro. "We don't think Congress should accept a back-room deal on how an iPhone should be designed. We think consumers should choose and companies should choose." Jot Carpenter, vice president of government affairs for wireless industry trade organization CTIA, states there is "not a huge desire [among consumers] to listen to over-the-air, ad-laden radio" on mobile devices, adding there is scarce demand for phones with FM radio chips. [FierceMobileContent]

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