Another Royalty Issue Looms

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ascapIn my research for these blog posts, I surf through a wide variety of websites ranging from industry publications to personal blogs and anything in between. Today, I came across an interesting post on the Broadcast Law blog concerning a royalty issue that I’m sure many of you are unaware of.

I’ve been writing a lot about the Performance Rights Act as it makes its way through Congress. It proposes that a new royalty be imposed on broadcasters, one that goes to the recording artists who perform the tune played. That is not the royalty story I am writing about today.

You see, that battle has been raging across the media and the blogosphere for many months now and has everyone’s attention. There is, however, another royalty story that has gone unnoticed until now: a potential increase in ASCAP and BMI royalties, the ones every station already pays to the songwriters.

David Oxenford, who you might have seen moderating a panel at the recent National Association of Broadcasters (NAB) Show, examines the issue in his recent blog post. The ASCAP and BMI royalties he is speaking of are the product of agreements made five years ago when the economy was in less of a disarray. The fees in question were fixed rate, but due to projected growth in broadcasting were also set to increase each year:

But, as radio revenue has not continued to climb, but has in fact fallen in recent years, the fixed industry fee has caused the ASCAP and BMI fees to constitute far higher percentages of radio revenue than ever before.  At the same time, ASCAP and BMI and the composers that they represent have become accustomed to receiving an established, growing pot of money each year.  With two sets of differing expectations, conflict could arise.

This is something we all need to be aware of and involved in. With the explosion of options for music on Internet and mobile platforms, this subject could become murky very rapidly. Mr. Oxenford continues along that line later in his post:

These issues can become difficult, too, as it is not always clear where ASCAP and BMI’s rights end and where a broadcaster must deal directly with music publishers.  For instance, there is a question of whether a podcast is a public performance of a song or the making of a reproduction of that song – a different copyright licensed by the publishers, not the PROs (a topic we’ll discuss in another post).  This may present another difficulty in the royalty negotiations.

New technology will be the crux of this issue in my opinion. The delivery mechanisms it offers are widely varied and are completely new facets of the royalty debates. We have already seen the long and curious process of negotiating this sort of thing when Internet royalties were being decided in the recent past. Now the specter looms once more and the possibility of litigation in the case an agreement cannot be reached is one that should be watched closely.

As the economy continues to be in flux, the fixed rate royalties not only become more onerous to broadcasters but also present a regular income stream to the PROs. Stations across the country have already seen their profits devoured by the increasingly large percentage of the bottom line that these fixed rates represent.

The Broadcast Law Blog that I drew my quotes above from seems like a great resource for those who wish to keep up to date on issues of this nature. I’m sure that I will be stopping by frequently in my future research. For those similarly inclined I advise it!

Image: ASCAP logo / Fair Use: Reporting

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