You’ve probably heard radio ads recently from the NAB encouraging you to “Call your Congressmen” to complain about radio stations having to pay a new “tax” that Congress is currently considering. Everyone hates taxes, especially if it is big radio companies like Clear Channel who will have to pay it. [Who is NAB’s media consultant?]
The “Tax” isn’t paid to the government – it would go to the record labels to compensate the record companies for making a profit (in theory) from playing their music. In theory, some of that money will go to the artists or at least go to pay for promotion to build up sales of that artist. The radio station owner position is basically “there wouldn’t be any music business if it wasn’t for the free publicity we gave you”. The same people insisted that Sirius/XM and the Internet streamers *should* pay that same “tax”, and now “the chickens have come home to roost”, to borrow a phrase from Revenand Wright.
Many of the big members of the NAB also own TV stations. Let’s turn their own argument on its head for a moment. Back when cable TV was first rolling out, the NAB used its clout to force the “Must Carry” rule on Cable TV operators. At the time, the Big 3 TV networks (ABC, NBC, CBS) owned television. If you were lucky, there might be a PBS station and one independent station. TV had enormous clout. Competition from Cable TV was a serious threat to their monopoly. The idea that Cable TV would “steal” their programming, and maybe even make it easier for new TV stations to start had to be stopped in its tracks.
Each TV station (with a few minor exceptions) in the local coverage area of the cable TV operator gets to choose – generally every 3 years between two options. They can choose to be a “must carry” station, which means the Cable TV operator must include their station in basic cable service – and pay nothing to the TV station for using their fine programming (Must Carry is why your cable TV system is full of shopping channels). “Must Carry” stations cannot be paid by the cable operator and must be included in the basic channel service without a surcharge.
Or the TV station can elect to NOT be a Must Carry station and negotiate a deal (“retransmission consent”) with the cable TV operator, asking to be paid a “TV Tax” to the TV station owner, the cost of which is passed on to the cable TV subscriber. Having elected to not be a Must Carry TV station, the TV station can hold out for whatever terms it wants. Typically the demand is that the Cable TV company carry one or more non-broadcast channels in addition to the over the air channels.
The Cable TV company may then choose to drop the station from their system and refuse to pay the “TV Tax” to the TV station owners for making money from their fine programming. Should enough people complain that they miss the TV station, the Cable TV operator might be forced by consumer demand back to the negotiating table, or consumers might migrate to the Phone Company’s TV offering or sign up for satellite TV. On the other hand, advertisers will want reduced rates if the TV station has been dropped from Cable TV.
So what’s the connection and where is this heading? Here is my King Solomon “Cut the baby in half” solution to this issue. Apply the Must Carry logic to Over the Air Radio. Each radio station broadcasting music gets to choose their relationship with the record label(s).
- Option #1 – The radio station pays no royalty. The record labels in return get to determine the play lists and song rotation (within reasonable limits) within the genre of the station. The Labels get to play those songs that will generate sales and promote new artists and music discovery (the NAB’s reason why music labels benefit from radio air play). The radio station gets to play ads and keeps the revenue.
- Option #2 – The station picks the songs they want to play subject to the same basic rules in place today (limiting how many songs in a row you can play by one artist/album, not announcing playlists in advance, etc…) – but since the station is no longer operating for the interests of the record labels, the station must pay a royalty for using the songs. Playing Elton John songs from the 1970s probably doesn’t sell much music, so if a station wants to play old music or wants Jack to randomly play songs from a computer disk 24 hrs a day, they have to pay for using the music.
An optional (but important) part of this plan would be to end the Disney-fication of copyright law. Each time Disney’s feature film library is about to enter the public domain, Disney applies political pressure on Congress to extend the time period of Copyright Protection. Prior to 1976, the maximum period of copyright protection was 56 years. In 1976, the protection was extended to 75 years. In 1998, corporate holders get 120 years of protection from the date of creation. If the original standard was still in place, songs from the 1950s would be entering the public domain. World War 2 era music and before would all be in the public domain and not subject to a royalty “tax”.
Looks like time for some creative negotiation.