how much does radio pay for music

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The FCC today asked for public comments on the petition of the MusicFirst Coalition asking the Commission to take action against broadcast stations who did not fairly address on air the proposed sound recording public performance royalty for terrestrial radio.  The Petition, about which we wrote here, alleges, with very few specifics, that some radio stations have taken adverse actions against musical artists who have spoken out in support of the royalty, and also that stations have refused to run ads supporting the performance royalty while running their own ads opposing the royalty (opposing ads which MusicFirst claims contain false statements).  MusicFirst submits that these actions are contrary to the public interest.  The FCC has asked for comment on specific issues raised in the Petition.  Comments are to be filed by September 8, and Replies on September 23.  

The specific questions on which the FCC seeks comment are as follows:

(i)      whether and to what extent certain broadcasters are “targeting and threatening artists who have spoken out in favor of the PRA, including a refusal to air the music of such artists";

(ii)    the effects of radio broadcasters’ alleged refusal to air advertisements from MusicFIRST in support of the PRA;

(iii)   whether and to what extent broadcasters are engaging in a media campaign, coordinated by NAB, which disseminates falsities about the PRA; and

(iv) whether certain broadcasters have evaded the public file requirements by characterizing their on-air spots in opposition to the PRA as public service announcements.

 While we were concerned about the fact that the Commission is seeking these comments potentially indicating that the FCC might feel that the broadcaster has some obligation to address all sides of all controversial issues, implying that there is life in some vestige of the Fairness Doctrine, we were heartened by the FCC’s acknowledgment of the First Amendment issues that the petition raises.  The Commission stated:

We recognize that substantial First Amendment interests are involved in the examination of speech of any kind, and it is not clear whether remedies are necessary or available to address the actions alleged by MusicFIRST.

Continue Reading FCC Asks for Comment on MusicFirst’s Petition Against Broadcasters for On-Air Activities Opposing Radio Performance Royalty

One of the fundamental questions that surrounds the proposed broadcast performance royalty for the use of sound recordings by over-the-air (or the "performance tax" as it has been labeled by the NAB) is how much it could it cost a broadcaster?  Right now, that question is difficult to determine, as the pending bills do not themselves provide any details as to what the fees would be, except for noncommercial entities and for small broadcasters for whom fixed yearly fees are proposed.  For a broadcaster with a station having over $1.25 million in yearly revenues, the current Congressional bills leave the amount of the royalty to be determined by the Copyright Royalty Board.  In the current Senate draft of the bill, the amount to be paid would be based on the "willing buyer willing seller" standard that has been so controversial for Internet Radio companies. But the hearing to be held by the Senate Judiciary Committee tomorrow will address, among other issues, the question of "platform parity," i.e whether all companies subject to the sound recording performance royalty should pay a comparable rate, so we may see that proposal change as it did in the House version, to some form of the 801(b) standard (about which we wrote here and here).

We will write about the differing rates paid by differing music services in the next few days, especially as it becomes clear as to what rates for Internet radio royalties were agreed to under the most recent settlements with webcasters pursuant to the Webcaster Settlement Act.   But even without a detailed analysis of all of the rates that have been agreed to, certain trends can be seen as to what SoundExchange, on behalf of the artists and copyright holders, believes to be a fair royalty for the use of their music.  And that number is likely to be a "Substantial" one, as suggested by a recent Congressional Budget Office review of the cost to broadcasters of the proposed performance royalty.Continue Reading Broadcast Performance Royalty – What Would It Cost? The Congressional Budget Office Says A “Substantial” Amount

The week, Congressman Rick Boucher, a member of both the House of Representatives Commerce and Judiciary Committees, told an audience of broadcasters at the NAB Leadership Conference that they should accept that there will be a performance royalty for sound recordings used in their over-the-air programming and negotiate with the record companies about the amount of a such a royalty.  He suggested that broadcasters negotiate a deal on over-the-air royalties, and get a discount on Internet radio royalties.  Sound recordings are the recordings by a particular recording artist of a particular song.  These royalties would be in addition to the payments to the composers of the music that are already made by broadcasters through the royalties collected by ASCAP, BMI and SESAC.   Congressman Boucher heads the Commerce Committee subcommittee in charge of broadcast regulation, and he has been sympathetic to the concerns of Internet radio operators who have complained about the high royalty rates for the use of sound recordings.  Having the Congressman acknowledge that broadcasters needed to cut a deal demonstrated how seriously this issue is really being considered on Capitol Hill.

The NAB was quick to respond, issuing a press release, highlighting Congressional opposition to the Performance royalty (or performance tax as the NAB calls it) that has been shown by support for the Local Radio Freedom Act – an anti-performance royalty resolution that currently has over 150 Congressional supporters.  The press release also highlights the promotional benefits of radio airplay for musicians, citing many musicians who have thanked radio for launching and promoting their careers.   The controversy was also discussed in an article on Bloomberg.com.  In the article, the central issue of the whole controversy was highlighted.  If adopted, how much would the royalty be?  I was quoted on how the royalty could be very high for the industry (as we’ve written here, using past precedent, the royalty could exceed 20% of revenue for large music-intensive stations).  An RIAA spokesman responded by saying that broadcasters were being alarmists, and the royalty would be "reasonable."  But would it?Continue Reading Congressman Boucher to NAB – Accept Performance Royalty – How Much Would It Cost?