FCC chairman Kevin Martin increased his vocal fight for a la carte cable programming in a letter sent to several minority groups yesterday, arguing that it would actually assist poorer minority groups.

Martin cited a Nielsen study pointing out that the average cable subscriber was paying for 85 channels, while that consumer really is only watching 16 channels. (I wonder if the same applies for satellite radio?)

"Channel choice is increasingly significant to consumers as the number of channels included in expanded basic, and the corresponding price to consumers, has continued to skyrocket," Martin wrote. "Indeed, cable rates have more than doubled in the last ten years. Cable companies often point to the increased number of channels being offered as an explanation for the increase in prices. This explanation, however, ignores the fact that most of these channels are not actually being watched.

"While I believe all consumers would benefit from channels being sold in a more a la carte manner, minority consumers, especially those living in Spanish speaking homes, might benefit most of all," Martin said.

Consumers typically have to buy large, expensive blocks of channels to access Spanish-language channels, he said.

Martin's letter was sent to the Black Leadership Council, the Hispanic Federation, the Labor Council for Latin American Advancement, and the League of Latin American Citizens, among others.

Earlier this month Kevin Martin said he was "pleased" with the proposed Sirius-XM a la carte pricing plan.

While Martin's support for a la carte has been well known for sometime, this clearly shows his feelings that it extends past the issue of simply "price," and reaches the overall issue of diversity in media. Sirius and XM's proposed a la carte pricing plan can act as a springboard for a la carte in the rest of the media industry in my opinion. Not only setting a precedent, but can even be shown as a working prototype to cable companies that the business model can actually work.

The FCC has an opportunity here. I hope they don't just let it slip through their fingers.

[Fox News]
Thanks Squeaky Wheel!

Sirius and XM are still in the midsts of a proceeding in front of the Copyright Royalty Board (CRB) over music performance royalties to be paid to SoundExchange. A recent SEC filing by Sirius provides more clarity over what has taken place, and what's currently on the table.

In June, the hearing took place between Sirius/XM and SoundExchange (the organization that collects and distributes the royalties to performance artists). In July, all parties filed rebuttal cases, and in August the CRB will convene to have the rebuttal evidence presented.

Now here's where the
Sirius and XM originally proposed a royalty rate of 0.89% of all satellite radio subscription revenue. But this has now changed (at least for Sirius - and I assume XM - though that has not been specifically noted) . They've proposed a new rate of $1.20 for each performance made of a copyrighted sound recording.

That's for 2007. Sirius (and again, presumably XM) also proposed that this royalty rate be adjusted each subsequent year by a percentage equal to the percentage change in aggregate satellite radio subscribers during the preceding year.

SoundExchange has originally proposed a scaled system, ranging in seven steps - from 8% of all revenue, to an incredible 23% of all revenue. That translates to a range of $0.85 per subscriber, to $3.00 per subscriber. The problem with this (in my opinion) is that a percentage of all revenue makes no sense when a large amount of the programming made available on Sirius and XM is talk, news and sports programming. All of which already have their own individual contract arrangements (and Sirius/XM pay significantly for them). There's no need for performers to get a cut of Howard Stern's listenership.

But SoundExchange has also provided an alternative, which is encouraging. It's a per-broadcast fee structure, which (they claim) is calculated to reach similar fee levels if Satellite Radio continues with their current level of music performances.

The key takeaway here is a per-performance rate is now on the table. I'm not sure how many performances either service plays per month (a figure I heard from XM was 160,000 unique songs per month - but that's not all inclusive), but a per-performance rate sounds far more reasonable than a percentage of all revenue. Keep in mind that Mel has previously testified that he would consider removing music from the service if the original SoundExchange rate proposal were adopted. So it's encouraging that SoundExchange is also considering a per-broadcast structure.

Sirius said at last week's earnings call that they expect a decision from the CRB proceedings by the end of this year.

[Sirius 10-Q]

The NAB has released an analysis showing that the A La Carte proposal - the one that the FCC Chairman has just expressed being pleased with - is in fact... a "sham."

The NAB (reaching further back into the coffers of dead terminology by calling the proposal "much-ballyhooed") found that the A La Carte offering in fact costs more on a per-channel basis than what subscribers currently pay.

It's amusing that the NAB finds that a "required hardware upgrade" as being against the public interest, when they're pushing for HD Radio which... requires a hardware upgrade. It's even more amusing that they assume the FCC doesn't see right through this.

Regardless, NAB staff will be meeting with FCC Commissioners and FCC staff this afternoon to present the the pricing chart analysis. In addition, the analysis will be forwarded to the DOJ. Presumably because they are under the assumption that these government agencies cannot perform simple math on their own.

Even the most superficial "analysis" of the A La Carte plan shows that pricing per-channel is higher, but I don' t think that's the point. And apparently neither does Kevin Martin.

Today Martin said he was "pleased any time companies come forward with proposals that would give consumers more control over what they pay for." It's about control, not necessarily price-per-channel. Surely the economies of scale don't escape Mr. Martin (nor the NAB, though they may ignore them in this case), but hey, when you've got an agenda, why let logic get in the way?

Read the full "analysis" here (PDF) or view it after the jump...

Yesterday the House Subcommittee on Courts, the Internet, and Intellectual Property held a hearing on updating the performance royalties rules which would pay artists a royalty when their music is broadcast on terrestrial radio.

Marybeth Peters, Register of Copyrights at the U.S. Copyright Office, was in attendance and had very compelling case (mentioning satellite radio several times in her testimony). She laid the ground that all services should be treated equal, and if digital broadcasters need to pay a performance right, then so do analog broadcasters.

Here's one of my favorite statements from her testimony:
"Consequently, whatever promotional value that may have existed in 1995 has been diluted by the increase in alternative media, such as satellite radio and digital music services... Moreover, broadcasters’ claims ignore the fact that songwriters and music publishers receive payments for the same public performances for which performers and record companies do not. The broadcasters’ rhetoric never accounts for this inconsistency and it fails to explain why airplay provides promotional value to performers and record companies but not to the songwriters and music publishers."

Peters also brings up the Inno lawsuit, and that a similar suit against a free over-the-air recording device would likely have completely different results.

Also in attendance were recording artists and GRAMMY winners Judy Collins and Sam Moore.

"The issue here is simple, it’s about fairness," said Judy Collins. "Radio is multibillion dollar industry built on our creativity, our passion and our soul which is part of every song aired on the radio. Every other music distribution platform – Internet, cable and satellite radio – recognizes what we bring to sound recordings. Terrestrial radio no longer has an excuse. It’s time to acknowledge the performer and treat us fairly."

"You may remember a little song that Stephen Sondheim wrote for the musical A Little Night Music entitled 'Send in the Clowns'," Collins told the subcommittee members. "I recorded the song in 1975 and shortly after release, the record became a top radio hit."

"Unfortunately, I did not earn a cent from radio even though that song was played time and time again. On the other hand, Stephen Sondheim earned millions. He wrote me a thank you note... It read, 'Judy, thank you for giving me my first hit song.' It is a wonderful song. Stephen deserves to be compensated for his creativity. But I do, too; as do the thousands of artists who bring music to life on the radio…"

And Sam Moore drives the point home perfectly...

"If broadcasters shared any of the money they earn from playing my recordings, I'd be spending more time with my grandchildren," said Sam Moore "I’m 71 years old and still touring to support myself and my family. A fair performance right would allow me to retire from a life on the road."

"I remember Mary Wells coming to my house after she was diagnosed with cancer. Mary brought so many great songs to life, including the number one hit 'My Guy.' And yet, she told me and my wife that she didn't know what would happen to her little girl Sugar after she died. In 1992, with no income earned from decades of radio airplay, Mary died without being able to provide for her daughter..."

"I think about the late Junior Walker going out on tour sick with cancer, needing to earn income. I think about Bo Diddley, today still recovering from a stroke he suffered last year while performing – at nearly 80 years old. Many of our greatest artists, who created the recordings that are the soundtracks of our lives, must tour until they die because they are not compensated by radio for the performance of their work."

Wow. It is absolutely time to level the playing field.

Read the full statements below (all are PDFs):
[Marybeth Peters]
[Judy Collins]
[Sam Moore]