Royalty Fees Rise For Canadian Radio Stations

Canadian broadcasters have slammed a decision on Friday (Oct. 14) by the Copyright Board of Canada--a federal government regulatory tribunal--that significantly boosts royalty fees that Canadian radio stations have to pay to the Society of Composers, Authors, and Music Publishers of Canada (SOCAN), and to the Neighbouring Right Collective of Canada (NRCC) for the use of their music in the years 2003 to 2007.

Rates will vary according to a station's advertising revenues.

Under the new rates, radio stations playing music will continue to pay the performing rights society SOCAN 3.2 per cent of their first $1.25 million ($1.06 million U.S.) in annual revenues and $100 ($84.72 U.S.) to the music industry collective NRCC. Annual revenues over that amount increases from 3.2 to 4.4 per cent for SOCAN, and from 1.44 to 2.1 per cent for NRCC.

Music stations that play less music will see an increase in their rate from 1.4 to 1.5 per cent of the station's annual revenues for SOCAN, and from 0.64 to 0.75 per cent for NRCC.

In total, according to the Board, the new rates are expected to generate a little over $55 million ($46.62 million U.S.) for SOCAN and NRCC. The old rates would have generated approximately $44 million ($37.30 million U.S.).

In the Board's decision, it noted that the SOCAN royalty rate had remained unchanged for the last 25 years and had not been reexamined for almost 50 years. The Board further noted that the current rate was too low and undervalued the role music contributes to the radio industry and that the amount and manner in which music is used by commercials has helped radio to create significant efficiencies.

In the decision Claude Majeau, Secretary General of the Board emphasized that, "Over the last several years, the Board alluded to the possibility that music on commercial radio might be undervalued. The evidence presented as this hearing allowed the Board to confirm that impression."

A statement from Canadian Association of Broadcasters, the national voice of Canada's private broadcasters, described the decision as "both aberrant and unreasonable." "These massive and historic rate increases are entirely unjustified, and are nothing more than a tax on efficiency, innovation and good programming," says CAB President and CEO Glenn O'Farrell.

Counters Paul Spurgeon, VP Legal Services & General Counsel of SOCAN. "We have worked to have the rates increased for over 25 years and the Board's decision and acknowledgment that the previous rates undervalued music's contribution to the radio industry is very reassuring."

The CAB is reviewing all courses of action to challenge the Board's decision.