Opinion: Did The NAB Throw Radio Under The Bus?

From Radio Insights, Harker Research

After years of opposition, why did the NAB and its President and CEO Gordon Smith seem so anxious last Fall to cut a deal requiring radio stations to pay millions of dollars in royalties to record labels?

Think back to October when the NAB Radio Board tried to quickly push through a deal committing radio to pay a 1% royalty with musicFirst, the labels’ front organization.

Coming out of radio’s worst recession that saw $5 billion dollars of revenue evaporate, the last thing radio needed was a new multi-million dollar expense item.

Polls at the time showed overwhelming opposition to the deal by broadcasters, yet the NAB pushed hard for the deal.

The people behind the NAB’s Terms Sheet warned that radio needed to complete a deal before Congress forced a more onerous one on radio.

But was that true? Or was there something more behind the NAB’s interest in giving away millions of radio’s dollars?

Smith’s recent key-note address at the Las Vegas convention suggests it had little to do with radio, and a lot to do with the NAB’s priorities.

Here’s what Gordon Smith now says about the royalty fight:

Last year we stopped the legislation that would impose a performance tax on local radio stations. This was a freight train headed for passage.

The White House was for it. Congressional leadership supported it. Both the House and Senate Judiciary Committees had passed it.

We brought the freight train under control by seeking a good faith, workable agreement with the music industry, while at the same time aggressively opposing the bill as written.

It is an interesting re-interpretation of the events of last Fall.

In truth, 260 House members and 27 Senate members were already on record opposing the radio “performance tax” by March of last year. The bill hadn’t advanced since the Summer of 2009 when the proposal was voted out of committee.

The NAB had already proudly announced the tax proposal dead months before. The royalty deal had no chance of passage.

So why does Gordon now declare the bill a freight train headed for passage? 

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