For several decades now, radio stations have been exempt by statute from having to pay royalties for playing sound recordings over the air. This was from a time when radio stations actually promoted music over the air. Over time, this trend in radio had shifted in this country. Gone are the days of the "boss jock" or the "good guy" who would not only announce the song, but even say what label the song was on. Music on the radio has become more institutionalized, especially in the face of streaming services that have no DJs and allows you to skip songs that you don't like.
As a result, the recording industry has been pressuring Congress to eliminate the statutory exemption for radio. The general thought has been that radio, mainly commercial radio has been making billions in revenues from over-the-air public performances of recordings without a dime of royalties going to the recording industry. In the past, the RIAA has been pushing for payments from radio, including noncommercial stations of all sizes, including LPFM. Radio has been pushing back, but the recording industry continues to persist.
One of REC's main objections to these royalties in the past is that noncommercial educational stations, including LPFM stations are barely making any revenues from the airplay of recorded music and that slapping any significant new annual fee on these stations would be devistating to providing local community services, especially in light of the rising demands from the Performing Rights Organizations like ASCAP, BMI, SESAC and newcomer GMR.
Stations that choose to stream their stations are already paying unreasonable rates to the recording industry, a rate that doubled in just this year.
Fast forward to today, there is a bipartisan effort in Congress being led by Ted Deutch (D) of Florida and Darrell Issa (R) of California to introduce the American Music Fairness Act, a bill to ensure that artists and music creators are fairly compensated when their songs are played on terrestrial radio.
The most important part of this legislation are the statutory "exemptions" being put into place for noncommercial and even commercial broadcast broadasters that make less than $1.5 million in annual revenue and an even stronger carve-out for stations making less than $100K annually. Under the legislation:
- Commercal stations with annual revenues of less than $1.5 million (less than $10 million for their parent company) will pay an annual royalty of $500.
- Noncommercial stations with annual revenues of less than $1.5 million (less than $10 million for their parent company) will pay an annual royalty of $100.
- Commercial and noncommercial stations with annual revenues of less than $100,000 will pay an annual royalty of TEN (10) DOLLARS.
You read that right. Very small stations including likely, most every LPFM station would only pay $10 per year for recorded music over the air. We point out, this does not include what stations are paying right now to ASCAP, BMI and SESAC and we understand that on principle, any kind of a new royalty for the recording industry may not seem good, especially after receiving the news of the doubling of the streaming license.
We also note that these $10, $100 and $500 rates will be codified in the U.S. Code. This means that, unlike the ASCAP/BMI/SESAC rates, the Copyright Royalty Board can't arbitrarily increase these rates over time. The only way these $10, $100 and $500 price points can be increased is through an act of Congress. In other words, they will need to pass another bill.
REC's constituency includes mainly LPFM stations that are well under $100,000 level, in fact, they are under the $20,000 level and many LPFM stations are not making any real revenue at all. Instead, they are programming their stations as part of the budget of their licensee organization's educational program or through the passion of the station's stakeholders. Therefore, a large majority, if not all, would wind up in the $10 category.
Of course, supporters of this legislation expect pushback from the NAB, but then again, those of us in LPFM have a lot of experience in NAB pushback.
It is REC's position that a $10 annual increase in over-the-air music licensing, is a microscopic price to pay for the ability for community radio stations to continue enhacing their station's sound in order to keep listeners interested in radio and tuned in for local information, entertainment, education and localized emergency alerts.
REC Networks joins in with like-minded entities, such as the National Federation of Community Broadcasters, Alliance for Community Media, Prometheus Radio Project, Common Frequency and Media Alliance in endorsing the American Music Fairness Act.
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REC Networks is an unincorporated entity based in Riverton, Maryland dedicated to citizen's access to spectrum. More information at recnet.com.
Media Contact:
Michelle Bradley, CBT
202 621-2355
lpfm@recnet.com
