[cma-l] Free Community Radio Seminar

[Two Lochs Radio]

Spot on Ian! 

What is really galling is that PPL justify their substantial minimum raes (as opposed to proportional to use) by saying that it is necessary to cover administration costs with the smallest stations. In other words they are saying that most of the royalties paid by the smallest stations do not in fact go to the artists and record companies, but in fact are spent on PPL admin overheads! Although they are a 'not for profit' company like all of us, they do still maintain a large staff with well paid senior management (the top earner gets over £0.5 million annually), legal teams etc, who are paid for before remaining monies are distributed to rights holders. Overall PPL (for which I have figures) spends 15% of its gross income on overheads, but I would guess that in the not-for-profit sector this proportion is nearer 80%. 

Also last year PPL reported a £1m increase in revenue from radio broadcasters, despite by their figures, an 8% fall in commercial radio revenues. Also, for some reason they exclude the costs of their defined benefit pension scheme when calculating overheads.

PRS recorded around £15m increase in income over the same period of industry downturn, however it's overhead costs are lower, at around 10%, and it boasts of being "one of the world’s most efficient combined rights collecting operations". 

To take some round figures to put this into perspective, a typical broadcasting licensee has a minimum charge of around £600 and there are around 200 very small licensees who are likely to have genuine proprtional use more like an average of, say, £100. Those figures would mean PPL is costing the sector £100k per year in admin overheads that simply go to pay for staff to collect the money, while only £20k is passed on to rights holders. 

Not a very efficient system, to say the least, and a substantial drain on the community sector, and that's just for one collecting body. Those are conservative estimate figures - the total efficiency waste for the whole non-profit sector across all three royalty collectors, including web stream royalties, could easily mount up to as much as the entire annual Community Radio Fund!

The royalty bodies are really able to maintain their present position only because they have the financial backing to stand the legal costs that would be involved in arguing the case before a Copyright Tribunal (which is the legal arbiter on what the royalty collectors can do), so the small stations (and even not-so-small) are not in a financial position to challenge them.

It is legally open to the user of any copyright works to declare that they are not being offered a realistic licence by the collecting body, and to deem their own reasonable rate of payment pending an application to the Copyright Tribunal (that's simplified, but is the basic provision in law). But of course there are high stakes in that for an individual station, and most of us would be financially broken by a week's legal costs if awarded against us. 

Three years ago, after a year of negotiation was getting nowhere fast, we told one copyright body we were going to go down that route, but before we got to formal legal procedings they came up with a compromise offer that suited us reasonably well at the time. I suspect that despite the potential threat of legal costs, they equally knew that the case could have brought them adverse publicity and set a precedent for other stations.

PPL is well known for doing nothing to minimize the legal costs that are racked up. So much so that in one case in which their case was accepted, the Tribunal ordered them to pay the 'losing' parties' costs anyway because the Tribunal recognized that PPL had unreasonably racked up the legal costs by various tactics.

If the whole sector stood together with joint financing of an action, or the CMA performed that function with the formal backing of the sector, a case could be taken before the Tribunal and I think it would stand a high chance of winning, but of course the stakes are still high.

I would prefer to see CMA do for non-profit stations what the RadioCentre does for the (notionally)profit-making stations' MCPS payemnts. The RadioCentre pays MCPS a total figure for all its members, based on the total music usage across the board, and then passes on the costs to its members in strict proportion to their TSAs (it could possibly be done more fairly in proportion to income, but that would add a large admin overhead in cllating the figures). Doing this means that a very small community-based stations pay typically only £50-150 a year, while the big commercial stations pay a fair share.

This would destroy the royalty collectors' defence of their high minimum costs as they would now have the overhead of dealing with only one body for the majority of the sector. This would cost more than administering one station, since there would need to be some auditing checks etc, but the costs would be a tiny fraction of the costs they claim in administering several hundred stations individually, and the individual stations should on average see a several-fold reduction in their fees.

I think CMA should offer to take on this role, or if it is unwilling, they not-for-profit sector could set up its own aggregating body to handle this (and if successful, it could potentially develop to other things in future - such as group insurance schemes, or even advertising sales). CMA already has to do membership admin and could handle the PPL/PRS payments in the same as RadioCentre does with MCPS - simply adding the proportional charges to the annual renewal invoices, with automatically calculated amounts requiring little admin overhead. 

This should also benefit CMA and sector cohesion as stations would see a direct financial and admin benefit from CMA membership in addition to all the more nebulous lobbying and education work. In the case of RadiCentre, membership for smaller commercial stations is cost-negative because of the savings they make in MCPS fees by paying a proper proportional amount instead of an individual minimum fee-based amount.

That's my pennyworth, anyway (or potentially £1m pound's worth if our sector got its act together!)

Alex
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