As Pundits Debate FM Radio on Mobile Phones, Performance Royalties Issue Languishes
As Pundits Debate FM Radio on Mobile Phones, Performance Royalties Issue Languishes

About a year ago, the Web lit up with stories of a possible compromise between the music industry and the National Association of Broadcasters over the issue of the performance right royalty.

The deal, as outlined, was that NAB would agree that radio stations would pay about 1% of their annual net revenue to artists and labels in return for their support in passing a bill in Congress that would require all portable electronic devices, including mobile phones, to be sold with a FM radio receiver.

There's been little action since then, but the issue has landed in the news again over a back-and-forth between the NAB and an analyst who recently issued a report throwing cold water on the idea of FM radio usage on mobile phones.

The analyst, Mark Ramsey, commissioned a report by VIP Media Research, which among other things found the following:

- 85% of people surveyed listen to 30 minutes or more of radio a day
- 70% of them own mobile phones, and of them 17% have a phone with a FM radio built in
- Of those with built-in FM radios, more than half (57%) use the FM tuner "almost never." Another 25% say "once in a while," 14% say "a few times a week," and 5% say "nearly every day."

"It … suggests that most listeners would ignore the feature or use it sparingly," Ramsey wrote on his blog. "In any event it hardly constitutes a "must-have" for the majority of mobile phone users who represent the majority of radio listeners."

Meanwhile, the study found far greater usage of personalized radio apps (like Slacker and Pandora) or apps offered by radio stations (like Clear Channel's iheartradio.) Among those that have downloaded such apps, 16.9% say they use their personalized radio app "every day" and 23.4% say "a few times a week," with 9.1% and 12.5% saying the same, respectively, for a specific radio station app.

The full study is available here.

As these results clearly bode ill for the NAB's efforts to convince Congress that a built-in FM tuner is necessary in mobile phones and other electronic devices, the association responded rather negatively. In an opinion article in Radio Ink, NAB's TK Dennis Wharton called the study "poorly designed" and accused Ramsey of using data to support a "pre-conceived negative opinion" of FM radio in mobile phones. In particular, he criticized the relatively low sample of 164 responses taken from 1,346 people surveyed. Additionally, he said that even if 57% of people with FM radio chips on their mobile phones really aren't using it, 43% still are, claiming that's a positive figure.

"His conclusions about consumers' satisfaction are hard to take seriously," writes Wharton. "When a true examination of people's attitudes towards radio-capable cell phones is conducted, the facts are simple: the more that Americans hear about the benefits of listening to radio on mobile devices, the more they want the service."

He also provided some stats of his own:
- 73% of respondents to a 2010 Harris poll said it was important to have an FM radio tuner in their mobile phones
- In Latin America and Asia, 45% of mobile phone owners list radio as one of their top three features considered when buying a mobile phone.

Wharton also took a shot at mobile operators, who are staunchly opposed to any law that would mandate FM chips in mobile phones.

"So why are U.S. wireless carriers reluctant to embrace adoption of a free and local radio chip?" he writes. "Perhaps it's based mostly on greed, because they want consumers to use data-consuming music-listening apps, especially now that cell phone providers have all adopted pay-by-the-bit billing plans."

Ramsey responded to the criticism with a new blog post, essentially saying the NAB's positive bias is no better than the negative bias it accuses him of harboring, and also disputing that he has a bias at all.

"I make my living by playing the hand consumers deal us, not the one we wish to be true."

While all this is an interesting back-and-forth debate, it really doesn't get the establishment of a performance royalty any closer, which at the end of the day is the issue that's most important to the music industry. Supporting the establishment of an FM radio chip mandate is just one potential means of getting there.