Potential terms of a performance royalty deal — between U.S. commercial radio broadcasters on the one hand, and performers and music labels on the other — have been made public.
No terms have been agreed to. But the publication by NAB Friday of the proposed terms under consideration provides insight into the areas of negotiation.
The National Association of Broadcasters Radio Board held an “educational update” on the status of the talks with musicFirst, with which it has been fighting a long, contentious lobbying battle. Afterwards, NAB spokesman Dennis Wharton issued a statement describing the board talk as “a full and productive exchange of ideas.”
NAB appears to be working to shape the debate and outcome rather than face the possibility that less palatable legislation will be passed in the waning weeks of the current Congress.
Wharton emphasized that no votes were taken at the board meeting and that the group remains strongly opposed to the pending bill in Congress.
Here is the “fact sheet” released by NAB to reporters covering the debate, in full:
PROPOSED Terms Under Consideration in Performance Tax Discussion
In 2009, Rep. John Conyers (MI-14) and Sen. Patrick Leahy (VT) introduced the Performance Rights Act (PRA) in the House and Senate, respectively. The legislation was voted out of the respective Judiciary Committees and has the support of certain members of congressional leadership.
Broadcasters’ counter resolution — the Local Radio Freedom Act — garnered significant support, which has helped prevent further movement on PRA.
At the direction of House and Senate leaders in late 2009, NAB met with MusicFirst — representing artists, labels and unions. To date discussions have yielded the following potential terms. These terms have NOT BEEN AGREED TO, but are under discussion by the industry.
• Tiered rate of 1% or less for all net revenue (roughly $100 million for the industry) which is permanent and can not be adjusted without changing statute or by mutual agreement;
• PERMANENT removal of CRB jurisdiction for terrestrial and streaming;
• Streaming rate reduction from current rates;
• Inclusion of radio chips on all mobile phones;
• AFTRA issues resolved (agency commercial replacement on webcasts).
The tiered rate of 1% or less for all net revenue would be as follows:
• Commercial and non-profit stations with revenue less than $50,000 annually would pay the lesser of $100 or 1% of revenue annually;
• Commercial and non-profit stations with revenue between $50,000 to $100,000 annually would pay $500 annually;
• Non-profit stations with revenue more than $100,000 annually would pay $1,000 annually;
• Commercial stations with revenue between $100,000 to $500,000 annually would pay the lesser of $2,500 or 1% of revenue annually;
• Commercial stations with revenue between $500,000 to $1,250,000 annually would pay $5,000 annually;
• Commercial stations with revenue more than $1,250,000 annually would pay 1% of revenue annually.
It is important to note that stations with incidental music use — news, talk and sports radio — would not pay for music. Additionally, religious services — not religious music — would be exempt from music fees.
The above referenced rates would be permanently fixed by statute and can only be changed by act of Congress or joint agreement between both parties.