From the Broadcast Law Blog, by David Oxenford: “In a pre-Christmas surprise that most broadcasters could do without, identical bills were introduced in Congress on Tuesday proposing to impose a performance royalty on the use of sound recordings by terrestrial radio stations.

“Currently, broadcasters pay only for the right to use the composition and do not pay for the use of sound recordings in their over-the-air operations of the actual recording.

“This long-expected bill will no doubt fuel new debate over the need and justification for this new fee… The proponents of the bill have contended that it is necessary to achieve fairness, as digital music services pay such a fee. To ease the shock of the transition, the bill proposes flat fees for small and noncommercial broadcasters – fees which themselves undercut the notion of fairness, as they are far lower than fees for comparable digital services.

“…The summary states that commercial radio stations with revenues of less than $1.25 million (supposedly over 70% of all radio stations) would pay a flat $5000 per station fee. Noncommercial stations would pay a flat $1000 annual fee. The bill also suggests that the fee not affect the amount paid to composers under current rules – so it would be one that would be absorbed by the broadcaster.

“The summary of the bill says that it would make other broadcasters not covered by these flat fees subject to Section 114 of the Copyright Act – meaning that their royalties would be set by the Copyright Royalty Board. But the summary does not make clear what standard would be used.

“Would it be the ‘willing buyer, willing seller’ standard that is used for (and produced such controversially high rates for) webcasters, or the more lax 801(b) standard that just resulted in a 6-8% of revenue royalty for satellite radio and has resulted in a 7% royalty for cable audio services? That may well be a crucial issue.

“Already, opponents of the performance royalty have signaled their opposition, suggesting that the low, introductory rates for small and noncommercial broadcasters are just that – an opening rate that will allow the royalty to be imposed, but will quickly be raised…

“In fact, when one compares the proposed royalties for small broadcasters with those paid by small webcasters, even those paying under some form of the Small Webcaster Settlement Act, an Internet radio station with $1.25 million in revenue would pay over $130,000 in royalties for sound recordings – which would seemingly raise questions either of fairness **, or suggests that SoundExchange will try to have the rates **raised in the future. And imagine what a $130,000 royalty would do to a small broadcaster’s business.”

Read the entire post at the Broadcast Law Blog.

Comment

1. When will there be a fair royalty fee across all mediums? The corporate strategies to suck massive fixed fees from everybody, no matter their size, would have shut down most small businesses throughout history. Fair and even fees please!!

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