OTTAWA – Commercial radio music royalties are rising by an estimated $13 million a year under new tariffs announced today by the Copyright Board of Canada.
Previously, radio stations paid a total of 7.3% of revenues (for gross income above $1.25 million) to a number of collectives representing musicians, songwriters, publishers, and other industry creators — to the tune of almost $70 million a year. The new rate will total 8.92%, due mostly to tariffs now going to two additional collectives. The Copyright Board estimates that the royalties to be paid by all commercial stations will amount to about $85 million a year.
Radio will now have to pay for reproduction rights — something vehemently opposed by the now-defunct Canadian Association of Broadcasters — to two additional collectives: AVLA/SOPROQ (representing record labels) and ArtistI (representing performers). The CAB had argued before the Copyright Board — which it persuaded to hold a consolidated hearing to consider all the rightsholders for the first time back in December 2008 — that making copies of music was part of its operations and was not a revenue-generating activity.
The board did not agree. The rate increase “is mainly the result of the introduction of two new rates, for the reproduction of sound recordings and of performers’ performances, which broadcasters already used but for which they had yet to pay,” said the news release accompanying the decision.
The CAB asked the board to reduce the total radio tariffs to 2.9% of revenues, arguing that listening to music — and therefore its value to radio — has declined.
Under the previous tariffs, broadcasters paid 4.4% of revenues to SOCAN (the Society of Composers, Authors and Music Publishers of Canada), 2.1% to Re:Sound (formerly the Neighbouring Rights Collective of Canada), and 0.8% to CSI (Canadian Musical Reproduction Rights Agency and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada), for a total of 7.3%, for revenues above $1.25 million. With the new regime, stations will continue paying 4.4% to SOCAN and 2.1% to Re:Sound, but the CSI tariff rises to 1.2%, with the board saying that a previous tariff decision had applied to SOCAN and Re:Sound and it should apply to CSI as well. In addition, broadcasters will pay a new 1.2% royalty to AVLA/SOPROQ and 0.02% to ArtistI, for a total of 8.92%.
“The Board recognized that this is an important increase, even though it is barely one-fifth of the increase the collectives had asked for,” the news release stated, noting that “the increase does not reflect an increase in the fundamental value of music” but rather requires broadcasters to pay for reproduction rights.
The board estimates that because of lower advertising revenues and low music use stations, the copyright tariff will effectively go down. “With total radio stations’ revenues slightly over $1.5 billion for 2009, the effective total royalty rate to be paid by radio stations is 5.7%. This corresponds to the proportion of their revenues that commercial radio stations will be paying to all rights owners for their use of music,” said Gilles McDougall, Acting Secretary General of the board, in the statement.
Cartt.ca will have reaction from industry players to this long-awaited decision next week.
