One week after the Copyright Royalty Board revealed its long-awaited initial decision about how much radio stations will pay in streaming royalties for the next five years, reactions from broadcasters are muted and somewhat mixed as the industry gets its arms around the ruling. The National Association of Broadcasters has not yet decided whether to appeal the decision which will hike the rate 17% from the current $0.18 for every 100 songs streamed on non-subscription ad-supported webcasts to $0.21.
Of the one dozen radio companies Inside Radio contacted for reactions, the vast majority declined to comment with one saying, “I’m not interested in wading into this debate.”
Among those who responded, a common refrain was a sense of relief that the CRB rejected a proposal by SoundExchange to raise the rate to $0.28 for every 100 songs streamed.
“We are appreciative that the CRB refused to adopt SoundExchange’s arguments,” said Caroline Beasley, CEO of Beasley Media Group, which owns 62 stations in 15 markets, including Philadelphia, Boston and Detroit. “We are, of course, concerned about any increase the CRB establishes for streaming rates.”
Raising the rates as the industry strives to rebound from the brutal advertising downturn from the COVID-19 pandemic is a concern shared by other groups. “It’s disappointing that in the most challenging period ever in the history of the radio industry, the CRB would choose this time to hike rates,” said Ed Levine, CEO of Galaxy Communications, owner of 13 radio stations in Syracuse and Utica, NY. With revenues not expected to normalize until 2022, Levine would like to see a 12-month moratorium on any rate increase “to give the industry time to breathe and get back on its collective feet.”
James Derby, Chief Strategy Officer & Director of Programming at Federated Media, said he wasn’t surprised by the rate hike. “Overall, the increase is manageable,” said Derby, whose company owns 15 radio stations in northern Indiana and southern Michigan. “Without the artists/writers providing their music to radio, we wouldn’t have anything to air on our music stations. Of course the other side of the debate is that without radio and streaming promotion, the artists/writers wouldn’t sell nearly as many songs. So there has to be a balance.”
‘Predictability And Visibility’
While broadcasters may not like the higher rate, one upside from the delayed CRB decision is removing uncertainty. “We’re pleased to have the uncertainty removed,” SiriusXM CFO Sean Sullivan said during an investor conference last week. The company is subject to the same 17% rate hike to 21 cents for every 100 songs streamed for its free ad-supported Pandora service and an 8% uptick to 26 cents for the subscription-based SiriusXM internet radio service. “We’ve got some predictability and visibility for the next five years, which is great. Certainly, the increases are meaningful, but certainly less than what had been asked for.”
The CRB judges rejected an attempt by the NAB to create a two-tier system, with streams that simulcast over-the-air radio stations paying a lesser rate. The complete decision will not be released for several weeks, and the outline made public June 11 made no mention of the NAB proposal, which had suggested that over-the-air stations pay a webcast rate of $0.08 for every 100 songs streamed.
For now, the NAB says it will wait until after it has reviewed the unredacted version and fully digested the board’s opinion. “We remain pleased that the Board rejected SoundExchange’s aggressive proposal to drastically raise rates for ad-supported services,” NAB spokesperson Ann Marie Cumming said.
Should the NAB appeal the ruling, it may lean into the argument that consumers listen to broadcast radio stations online to fulfill different needs than for online music services. “As unregulated tech companies continue to take more advertising dollars from local markets, increased expenses in the form of additional costs to stream present real challenges to our ability to provide free and local news and entertainment to the communities we serve,” said Beasley, adding that she “anxiously await[s] the release of the Board’s full decision.”
Levine, who says he “fully expects” the NAB to appeal, says few broadcasters make money from streaming their stations online, calling it “a necessary listener convenience at this point but not a true profit center.”
But Derby believes it is incumbent on broadcasters to create a profitable streaming model. “I don’t think the artists/writers should be burdened with something that is essentially our problem to figure out,” he says. “If we want to be where our audience is increasingly moving to then we need to figure out the model to generate revenue.”