NAB's Smith Needs Ethics Rule Waiver

Must have in order to participate in discussion with music industry reps on royalty payment issue

National Association of Broadcasters President Gordon Smith has told a group of legislators that he will need an ethics rule waiver to agree to their request to participate in a discussion with them and music industry representatives on the issue of royalty payment.

The chairmen of the House and Senate Judiciary Committees sent a letter to Smith, NAB Joint Board Chairman Steve Newberry and MusicFIRST Coalition Executive Director Jennifer Bendall Monday saying they want those stakeholders to start negotiating a royalty fee for radio airplay by Nov. 17.

Broadcasters have been battling legislation to that effect, pointing out the inherent promotional value of airplay to the music industry. But bills have been reported out of both committees and the legislators said it was time to come up with a negotiated payment that Congress can consider that "negotiated solution" as it considers passage of the Performance Rights Act. MusicFirst, which has been pushing for the Performance Rights Act, counters that the promotional value is on the other end. "Music promotes radio to the tune of billions in revenue every year - $14 billion this year alone. The promotional value of music far outpaces even NAB's questionable estimate of the promotional value of radio," says the group.

According to House Judiciary Chairman John Conyers (D-Mich.) and Senate Judiciary Chairman Patrick Leahy (D-Vt.), the negotiations, which will include committee members and staffers, should continue through Dec. 1, after which those members and staff will make a recommendation.

In a letter in response Thursday, Smith pointed out that his contacts with Congress are by necessity limited.

"In light of the existing laws prohibiting me from lobbying Congress for a period of two years after leaving office," he wrote, "I will need to request and be provided with an ethics waiver that indicates my participation in your November 17 forum is legally and ethically permissible. There is, as I understand, an exception for communications made in the
form of congressional testimony. I will need confirmation from the Senate that my participation falls within this, or some other exception."

If he gets that waiver, Smith has also asked that the meeting be in the afternoon because he has a previous speaking engagement. Smith is scheduled to speak at the Media Institute on that day.