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NAB’s Hypocrisy Is Apparent in STELA Debate

In ancient Greece, actors used to deliver lines wearing large masks so audiences didn’t know who they really were. The word for these actors – literally translated as “an interpreter from underneath” – was hypokrites. It’s where the word hypocrisy comes from, hiding one’s real character or inclinations to appear virtuous. This week, as they debate the Satellite Television Extension and Localism Act (STELA) Reauthorization Act, it’s the National Association of Broadcasters wearing the mask.

STELA is the legislation that allows satellite companies to license and transmit broadcasters’ content to underserved markets, including those lacking local affiliates. It enables these third-party satellite carriers to capture and use broadcasters’ programming without their permission and often at licensing rates below what broadcasters would prefer.

Through aggressive lobbying efforts over the years, and likely again this week in front of the Senate Commerce Committee, the NAB has urged Congress to reject reauthorization of STELA and set the course for it to sunset in 2019. One reason, the NAB says, is that under the current system, television stations don’t always get paid fairly when third-parties use their programming. In other words, broadcasters are angry because someone else is making money off the content they produced. The principle makes sense. We should all value creativity and pay for the use of another’s content. A simple concept to apply across the board, right?

But look behind the mask. NAB is not genuinely supportive of the virtue (or value) of paying others for the use of their creative work. If they were, why would the NAB treat television one way and terrestrial radio another?

Make no mistake: They do.

If a musician’s song streams on a digital platform, like SiriusXM or Pandora or Spotify, that artist gets paid a royalty. But listen to that same tune on an AM/FM station, and the artist gets paid nothing – even if millions of people are listening. That’s right – for decades the NAB’s members have been doing to artists exactly what they now bemoan is being done to themselves under STELA.

No other music distribution platform gets away with stiffing artists this way – not digital services, not cable companies, not even the pro-STELA satellite companies. So why should the NAB get special treatment? Indeed, at least with STELA the broadcasters get some money when satellite uses their content. On radio, artists get nothing when broadcasters use their music. The U.S. is alone in the developed world with such an arcane, outdated and abusive system. Alone. Let that sink in.

Yet, just as they are working to let STELA expire, the NAB also is lobbying to extend the radio exemption through what they call the “Local Radio Freedom Act.” The NAB’s resolution pretends that requiring radio stations to pay artists for the music that “draws the crowd” is a “tax”. In reality, what broadcasters have enjoyed is effectively a special government subsidy that lands entirely on the backs of artists.

Don’t be fooled; the radio broadcasters don’t need a helping hand. What was once your local radio station is now likely part of a very non-local conglomerate. Ten giant radio corporations own hundreds of stations in the U.S. They are responsible for about half of the revenue generated by the $17 billion radio industry.

Why give these huge companies a free lunch? Ask the group who is now fighting FOR performance rights on television why they have spent decades fighting AGAINST that same rights for creators on radio. Ask the NAB.

NAB might argue radio “pays” artists in other ways, like free promotion. Maybe this was the quid pro quo of years gone by. (That still doesn’t make denying performance rights okay). But in today’s digital economy, where 75 percent of U.S. recording revenues derive from streaming, the listen is the main event. And royalty-free radio cannibalizes listeners from all the other properly-paying platforms. That hurts artists.

The hypocrisy goes on and infects NAB’s historical arguments. On the one hand, they argue the STELA should expire because technology and market realities have changed since the law’s passage in 1988. Yet they remain willfully blind to the much bigger market and technology changes that have impacted radio during its almost-a-century of free-riding on the backs of artists. Big Radio’s failure to pay for the music is unfair and untenable in the modern music economy.

So, which NAB is it?

Is it the NAB that complains they are not being paid for their programming, or is it the NAB behind the mask – refusing to pay artists for the valuable music that drives the broadcasters’ service?

Is it the NAB that seeks expiration of STELA because market and technology changes have supposedly left the law outdated, or is it the NAB behind the mask – desperately seeking to retain their own legislative free ride – a free ride that is completely antiquated given the seismic market and technology changes in the music industry?

Despite its name, the Satellite Television Extension and Localism Act Reauthorization is not simply about television. It is about performance rights. It’s about the NAB’s hypocrisy. Creators must get paid, regardless of platform. To deny them compensation is to devalue creativity itself. That’s a fact we should not and cannot ever hide behind a mask.


Michael Huppe is president and CEO of SoundExchange.

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