Slyck Interviews the NCRA

While there may be a number of issues surfacing, such as Bill C-59 and Bill C-453, there’s another battle brewing under the radar.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

Tariff 22 is a tax that would put a new levy on radio stations across Canada. There’s no doubt that a few limited people participated in Internet radio ten years ago, but now it’s fast becoming a growing source for communities around the world to be exposed to new kinds of music.

Campus radio, a big player in the radio business, looked at this emerging technology. Unlike other cumbersome business models, campus radio seized the opportunity to reach out to their listeners by a new means. Now fans of various campus stations can be located anywhere in the world and still be able to hear their favourite campus radio DJ(s) and the music they promote.

It got people talking, to say the least, and many took notice – including the Canadian government. As a result, a proposal known as tariff 22 surfaced, which would put an additional tax for royalties on Internet radio. The real bombshell was noted when it was discovered that the fees would be retroactive – meaning anything aired before the tariff would hypothetically be put in place and continue on.

It’s these fees that have very few Canadian companies and organizations happy. Many say that it would force many things offline, like Internet radio made in Canada. To put into perspective what all the fuss is about, Slyck interviewed the NCRA (the National Campus and Community Radio Association). They are a representative body for campus radio all throughout Canada, and one of many who are fighting against the proposed tariff as it stood – with very good reason. With tariff 22 hearings looming, Melissa Kaestner, NCRA’s national co-ordinator, talked to Slyck in this exclusive interview.

Slyck: What is the National Campus and Community Radio Association (NCRA) and how prevalent is campus radio?

Melissa: The NCRA is a national membership-driven association of campus and community radio stations in Canada. It is a national voice for the community-oriented radio broadcasting sector. It represents and promotes the sector to such government entities as the CRTC and Canadian Heritage, to commercial broadcasters and the CBC, and to various organizations and businesses. In addition to providing a voice, it also provides resources to community-oriented broadcasters. This includes, but is not limited to, annual national conference, listeners, online programming resources, and consultation.

Slyck: How did Tariff 22 come about and in what ways is it relevant to you?

Melissa: SOCAN (Society of Composers, Authors and Music Publishers of Canada) would have the answer about how and why it came about. The tariff is relevant to us and other broadcasters as most radio stations stream their broadcast online. A few stations are even beginning to explore podcasting. As an online tariff, SOCAN Tariff 22 affects most every station in our sector.

Slyck: How widespread has Internet radio been established to members of the NCRA to compliment the traditional AM/FM counterpart?

Melissa: At least 90% of our stations offer a web stream of their terrestrial broadcast. So in that sense, it is quite widespread. However, numbers at this time indicate that listenership is pretty low. Most stations report less than 10 unique visitors per week. This is due in part to the fact that most stations do not actively promote their Internet streaming separate than that of their standard promotions. In other words, they do not conduct online campaigns to draw listeners online; they focus their attentions to the promotion of their station in their local communities and local campus.

They mention their online stream in these promotions, and people who do not have radios or who are not able to receive the terrestrial signal use the online feed. Low numbers of online listenership can also be explained by the software some stations are limited to. In the case of campus stations, for example, many stations use their universities’ servers, which can have software and bandwidth limitations. An example of this can be seen right here in Ottawa at CHUO FM. They can only offer their stream for Real Player users, and even then, only 10 people can listen at any one time.

Slyck: What would tariff 22, as it stands today, do to campus radio – especially considering that these fees are retroactive?

Melissa: According to many members, they would have to shut down their stream, as that is currently the only option besides paying $2400/year (or even $1080/year, as proposed during the hearings). This is a huge problem for our stations. While the current listenership online is low, it seems that the radio industry is having to adapt to digital broadcasting, including developing and maintaining a strong web presence. It is quite possible that if we are hindered by this tariff to remain online, we will disappear as a sector when looking at the possible future.

If the tariff remains retroactive, this could quite possibly put stations completely out of business. For about 40% of our members, the average operating income is approximately $60,000, with some of those stations earning as little as $5000 to $20,000. This money is *total* revenue, not just revenue from the streams. (It should be noted that our stations do not earn revenue from the stream, which is why they would be tariffed 3.6% on our web-related expenses as opposed to tariffed on the revenues. Of course, there is the minimum of $200/month (or possible $90/month, as SOCAN proposed during the hearings.) If these stations get a bill for $20,000, it is plain to see that these stations would either be severely impacted or forced to shut down altogether.

Slyck: There’s been a lot of talk, at least in the US version of this case, where Internet radio would simply be moved offshore where such royalty payments aren’t required. If tariff 22 comes to pass as it stands, would it be an idea for surviving campus Internet radios to move offshore or would that be considered almost a form of tax evasion and something that simply shouldn’t occur in the first place?

Melissa: In my opinion, I don’t think this is an option. First of all, many of our stations are currently using services from universities or are receiving discounted/free servers/bandwidth. Moving “offshore” would probably mean that stations would have to pay for a server and the traffic, not to mention all of the server administration. Secondly, if the radio industry is moving towards being online in Canada and the US, eventually, this trend will make its way around the world, and therefore could face the risk of being tariffed in those other countries. Thirdly, it is not the stations’ servers that are being tariffed, it is the stations themselves. Even if a station is completely off shore, unless they will keep their stream a secret, it seems logical that SOCAN would be able to propose a new tariff for Canadian stations offering streams, no matter where the server is.

Slyck: The strange part about tariff 22 is the fact that campus radio is already paying a levy so airplay is possible and royalties can be distributed to artists. Do you think that Internet radio is just an extension to get to potential listeners who would otherwise be out of range, and thus, the levy should be enough to cover Internet radio (also considering people can get the same stations via cable) or do you think additional fees should be implemented?

Melissa: This was our argument as well. If a station starts out as an AM station, for example, and then adds an FM broadcast, a station is not tariffed twice. The same is true if an FM station broadcasts on cable FM as well. They only pay their broadcast tariff once. Therefore, if a station is simply offering their terrestrial broadcast in an uninterrupted unedited form, then the stream should be considered to be covered under the current broadcast tariff we already pay. However, if stations move towards podcasting, then this is a new service, and therefore should be tariffed. I believe that the deal struck in the US involved podcasters paying $60/year. In my own opinion, I think that kind of tariff and rate would probably be acceptable by our stations.

Slyck: Are there other stakeholders involved that are likely to share similar positions as the ones you are holding? Additionally, how confident are you that the NCRA can make a difference on tariff 22?

Melissa: We have already made our case, along with everyone else, at the hearings at the end of April 2007. We did share similar arguments to other Canadian broadcasters, including the Canadian Association of Broadcasters (representing commercial/private broadcasters) and the CBC. After our various letters and hearing presentation, we were told by many of the participants, including Apple, that we did present a strong case. So we are confident that we were successful in making our points. It is now in the hands of the Copyright Board to make their decision.

Slyck: Where can people go to find more information about tariff 22, NCRA’s position and future developments on this issue?

Melissa: They can visit and read about our efforts both in our news section and in our newsletters. We will post on our website and issue a press release once the decision comes out. They can of course also call the office or write us for more information.

Slyck: Do you have anything further to add?

Melissa: I think that just about covers it, Drew. Thanks!

Slyck would like to thank Melissa Kaestner for taking the time out of her busy schedule to do this interview.

Drew Wilson on Twitter: @icecube85 and Google+.

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