Thursday, August 19, 2010

Music royalties compromise would require cell phones to offer FM radio

WASHINGTON — A long-running dispute between radio broadcasters and the recording industry over music royalties has taken an unexpected turn with a proposed settlement that threatens to drag the mobile phone industry into the ring.
The compromise under discussion by radio broadcasters, recording labels and recording artists could include a federal mandate that all new cell phones come with a built-in FM radio chip. While a deal is far from final, the prospect that the government could dictate a key design decision for such a ubiquitous consumer device has alarmed electronics manufacturers and wireless providers.

"This is two old-media industries attacking the new wireless broadband industry," said Gary Shapiro, head of the Consumers Electronics Association. "This is a battle that doesn't involve us."

Building FM radio into cell phones requires an additional antenna, which could add weight and bulk to devices prized for their sleekness, Shapiro said. It could also drain battery life more quickly, which could lead manufacturers to remove other features from their devices, he added.

"We don't think Congress should accept a back-room deal on how an iPhone should be designed," Shapiro said. "We think consumers should choose and companies should choose."

For decades, the National Association of Broadcasters has been fighting a music industry proposal that would require radio stations to pay music royalties to recording labels and performers for the right to play their songs on the air.

Current law requires broadcast radio stations to pay royalties to songwriters, but not recording labels or artists. Broadcasters argue that the existing arrangement makes sense because radio airplay provides free promotion and drives music purchases and concert ticket sales.

But compact disc sales have dropped off, and sales of digital albums haven't made up the difference, prompting labels and artists — represented by a group called musicFirst — to step up their push to start collecting royalties, too.

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