Music & Media

Roku’s stance speaks volumes about problems with FCC’s set-top box proposal

By: Mike Montgomery

The Federal Communications Commission’s (FCC) plan to mandate technology standards for TV set-top boxes in the name of creating more retail competition is being opposed by an unlikely source: set-top box maker Roku.

On the face of it, the FCC’s scheme is designed to help companies like Roku. The mandate would deconstruct the video streams coming into your living room’s traditional set-top box so they could be repackaged and served to you by any company with an interest in building a set-top box.

Roku already makes a device that streams video to televisions. The FCC’s proposal would give Roku, already an established player in the market, access to a whole new source of video programming – the consumer pay-TV packages forced open by the FCC regulation. That would seem like a powerful supplement to Roku’s current line-up of streaming video from sites like Netflix, Hulu and Crackle as well as content that lives on apps from networks like ESPN, CNN and Fox. If the FCC proposal went into effect Roku could directly stream live feeds from every broadcast and cable network.

Despite this supposed opportunity, Roku submitted a filing with the FCC opposing the scheme. In an op-ed in The Wall Street Journal Roku CEO Anthony Wood said, “This might seem like a great deal for consumers and companies like mine, but once you start peeling back the layers, the picture changes.” In its FCC filing, Roku stated, “rather than accelerate the pace and change of innovation, the FCC’s proposed rules could actually inhibit the transition from traditional programming delivery models to OTT services.”

Read the full article here.

ASCAP Just Proved The Continuing Need For The Consent Decrees

The licensing mega-group’s settlement with the DOJ is proof that the consent decrees are as important and relevant as ever.

By Mike Montgomery

On Friday, the American Society of Composers and Performers agreed to pay the Department of Justice $1.75 million to settle allegations of anticompetitive behavior. Despite the presence of consent decrees that specifically bar ASCAP (and BMI) from interfering with songwriters’ ability to strike direct deals for the licensing of their works, the licensing behemoth was caught red-handed flexing its oversized market muscle to block – not once, not twice, but 150 times – its songwriter and publisher members from licensing their performance rights directly to streaming services.

ASCAP is basically agreeing to do what it was legally required to do all along, but now throwing nearly $2 million down the drain that should instead have been distributed to songwriters.

It would be unbelievable were it not so typical of ASCAP’s consistent bad behavior.

ASCAP (and BMI, which collectively hold the rights to 90 percent of all music licenses) has proven how willing it is to wield its market power to squash competition, which harms songwriters and the prospects of a healthy, modern music marketplace. They trot their members out to Capitol Hill to cry poverty then report record annual royalty revenues of $1 billion – where is all that money going? They claim to have the best interest of their songwriters at heart, but at the same time leverage their enormous market power and comfy relationships with publishers on their Board (a clear conflict of interest that DoJ also is shutting down as a result of the settlement) to prevent songwriters from negotiating direct deals that may actually be in their best interest.

ASCAP’s response to DoJ? They had the audacity to say, “(w)ith these issues resolved, we continue our focus on…key reforms to the laws that govern music creator compensation.”

Why should the government award such behavior by even considering altering the consent decrees? The consent decrees have protected artists and helped enable the rise of music streaming, which is proving to be the most promising new revenue source for artists since the CD came along. Clearly they remain not only relevant, but essential.

Allowing a few big players at the top to use their market power to artificially increase the pricing of music won’t help songwriters. What it will help do is divert revenue opportunities from songwriters, chill innovation and competition, and turn consumers away from legal sources of music.

It doesn’t take a Berklee degree in Music Business to see that this will ultimately lead to a depression, not acceleration, in royalty revenues for songwriters and artists and what’s needed is increased transparency and a continuing adherence to the consent decrees.

Whether ASCAP likes it or not, the consent decrees work. They keep those tempted by untoward acts in-line. If anyone thinks that wouldn’t happen without the consent decrees, they need only to look to ASCAP’s settlement for proof.

Mike Montgomery is executive director of CALinnovates, a technology advocacy coalition.

This piece originally ran in Radio & Television Business Report, and can be viewed here.

FCC’s Set-Top Proposal Draws Crowd

By: John Eggerton

Commenters flooded the FCC Friday, the deadline for initial input on chairman Tom Wheeler’s proposal to “unlock” MVPD set-top box info and share it with third-party navigation devices.

“No demonstrable market problem exists to justify the kind of intrusive tech mandates proposed by the Commission,” said the Free State Foundation. “And it highly doubtful that any conceivable benefit could outweigh the heavy costs that the Commission now ignores – costs which will initially be paid by MVPDs or program content owners, but will ultimately be paid by consumers. The Commission performed no cost-benefit analysis of its proposal prior to its Notice. Nor did it even seek input to conduct such an analysis.”

Agreeing that it was an unnecessary and counterproductive government attempt to enforce tech policy on an innovative space was California tech advocacy group CALinnovates.

“Our analysis found that the FCC’s proposal would result in higher bills,” said CALinnovates executive director Mike Montgomery of the group’s filing. “It is apparent that with this set-top box proposal the FCC is missing the forest for the trees.  Specifically, the Commission obsesses over the size of one ancient, crumbling tree – missing the thriving vegetation sprouting around it.”

The Telecommunications Industry Association, which represents the manufacturers and suppliers of communications networks, was another critic of the proposal. TIA said in its filing that the FCC is operating on the faulty premise that the marketplace is not “replete” with navigation choices. It also says the standards setting provisions “could lead to device incompatibility, and risk pre-determining which technologies will prevail over time, contrary to widely followed standards making protocols.”

Read the full article here.

This piece can also be viewed here on Multichannel News.

FCC Set-Top Box Proposal Based Upon Faulty Economic Foundation, Will Harm Consumers, Innovators And Golden Age Of Television, Warns CALinnovates

Proposal Based Upon Flawed Data Fails to Embrace Consumer-Driven Promise of App-Based Future

SAN FRANCISCOApril 22, 2016 /PRNewswire-USNewswire/ — The Federal Communication Commission’s (FCC) set-top box proposal is an example of a one-size-fits-all tech mandate that rarely if ever works in practice and should be scuttled, tech advocacy group CALinnovates said in its filing to the agency.

“Our analysis found that the FCC’s proposal would result in higher bills, more advertisements, and less diversity and innovation on TV,” said CALinnovates Executive Director Mike Montgomery. “It is apparent that with this set-top box proposal the FCC is missing the forest for the trees.  Specifically, the Commission obsesses over the size of one ancient, crumbling tree – missing the thriving vegetation sprouting around it.”

In its filing, CALinnovates warns that the rulemaking is unnecessary given the breakneck speed of innovation in the marketplace. “Indeed, with change proceeding at such a rapid pace, one can only imagine how much the video consumption market will advance and reinvent itself before the FCC could even promulgate, much less implement, a final rule,” added Montgomery.

CALinnovates’ filing also included an in-depth analysis by Dr. Christian M. Dippon of NERA Economic Consulting. Dr. Dippon’s economic analysis highlights the number of ways that the FCC’s proposal will harm the entire video distribution ecosystem, including customers, suppliers, MVPDs, and content creators.

“If the FCC nevertheless implements its proposed regulations, there is no realistic promise of lower prices and increased innovation,” writes Dr. Dippon. “To the contrary, any intervention in a competitive market stands to harm the market, its participants, and ultimately consumers.”

Read the full release here.

FCC Proposal Threatens Innovation, TV’s Current Golden Age

By: Mike Montgomery

By any standard, it’s never been easier to watch what you want, when you want it, how you want it. Things like AppleTVRoku and Amazon’s Firestick bring Internet streaming to your television while apps like FXNow, HBOGo and WatchESPN bring television viewing to tablets and phones. The viewing worlds are converging and all of us who love TV are much better off because of it.

Yet for some reason, the FCC is trying to scramble the delicate balance that has enabled this Golden Age of content by forcing cable and satellite companies to undo the intricate deals they have put together with content creators in Hollywood and around the world to distribute the content consumers enjoy access to today and open those streams up to anyone who wants to repackage them.

The FCC claims that the proposal is meant to spur innovation. But that seems to be a ridiculous statement on two fronts.

First, we already have plenty of competition and innovation coming from new streaming boxes. Look at Apple TV, Roku, Chromecast, etc.

Second, the proposal actually undermines the cable and satellite companies’ incentive to innovate. Under the FCC’s proposal, the companies would have to disclose any technological innovation before introducing it. This would give any competitors plenty of time to copy those innovations and implement them on their own.

Would the companies that are clamoring for this deal want that same standard to apply in the tech industry? From my view running a tech advocacy coalition, the answer is a resounding “NO!”

Read the full article here.

Announcement by Comcast, Roku and Samsung highlights illusory narrative from FCC on set-top boxes

April 20th, 2016

“Today’s announcement that Xfinity customers will be able to access their content via the Roku platform, HTML5 apps and connected TVs such as the Samsung Smart TV without the need for a leased or owned set-top box is the latest example of how users can watch what they want, when they want and how they want. It’s also a not-so-subtle reminder to the FCC that innovation is happening at breakneck speed and is being driven by consumer demand rather than regulatory intervention. Innovation, such as the Xfinity Partner Program, continues to reshape the entertainment horizon.

Moving forward, we expect more examples of how live broadcast TV, on-demand options and gaming will continue to converge to the delight of consumers, their viewing preferences and their checkbooks. Soon the days of set-top boxes will be a distant memory. The Xfinity TV Partner Program announcement further cements our views that regulatory intervention in the set-top box market is unwarranted, as the future, according to consumers, is app-driven rather than box-driven. Despite today’s outstanding news from Comcast, Roku and Samsung, the FCC continues to careen down a perilous path that endangers future investment and innovation in the virtuous cycle that supports the current Golden Age of television.”

‘Music mafia’ is at it again

By: Mike Montgomery

When the Copyright Royalty Board issued its rate increases last winter, it seemed like the battle over reasonable royalty rates for music was finally settled. But the music labels were furious because they were banking on extracting far more from yet-to-be-profitable digital music services, so they could enjoy even higher margins at the rest of the industry’s expense.

Undeterred, the publishing arms of these foreign-owned behemoths, already raking in record revenues from streaming services, now want to leverage their monopoly control over musical works to extract higher royalty payments to further enrich themselves instead of the songwriters they represent. But they’ve run into an obstacle: their collection goons, ASCAP and BMI (aka the performance rights organizations, or PROs) are limited by federal antitrust consent decrees.

And that’s a good thing. The Department of Justice originally sued ASCAP and BMI – which together control use of approximately 90 percent of all music – for collusive, anticompetitive behavior more than 70 years ago. Today, the consent decrees are the only obstacles keeping these cartels from throttling the growth of innovative music platforms.

And yet the music mafia is begging the DoJ to bless the very kind of collusive behavior that landed them in antitrust court in the first place; behavior that the consent decrees safeguard against.

Today, when a digital music service (or anything else that plays music) negotiates a license with the PROs, they get the full use of the song even if ASCAP or BMI controls less than the full ownership stake in that song. In other words, any partial owner of a song can license the entire work (they just need to share revenues proportionally with other owners). This is known as “100 percent licensing,” and is a bedrock of the current blanket licenses.

Read the full article here.

Raising Music Royalties Takes A Toll On Innovation

By: Mike Montgomery

2016 has started out on a sour note for Live365. The online radio service, which specializes in user-curated music, announced that it has had to lay off a significant portion of its staff and will likely shut down later this year.

The reason: A decision by the Copyright Royalty Board to raise the rates non-interactive Internet streaming services like Pandora have to pay for the right to spin music. In December, the board raised the rate from 14 cents per 100 plays to 17 cents.

Three cents is trivial, right? Not exactly. It might not sound like a lot of money, but for small Internet streamers like Live365, it’s the difference between survival and ruin. It’s hard enough to run a business when 50% or more of a non-interactive streaming company’s revenues go toward royalty payments. It’s even more challenging when what’s left over can’t be reinvested into innovation or marketing in order to enhance the customer experience or grow the listener base through marketing and promotions.

Live365 isn’t the only victim of the CRB’s decision. SmoothJazzChicago, a site run by radio vet Rick O’Dell, is also shutting down. O’Dell cited the new royalty rates as one of the main reason he’s turning off the lights.

While the rate hike certainly harms the bigger players, it’s devastating to a whole tier of streaming companies that either serve niche audiences or were just getting off of the ground. There’s no doubt it’s also affecting the army of entrepreneurs in Silicon Valley and elsewhere who are currently hard at work on the next big thing for Internet music, not to mention the venture capital that will instead go toward startups that don’t have to give away the lion’s share of their revenue in order to avoid collapse.

Read the full article here.

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