SESAC

A songwriter recently posed a distressing question with me: Do the songs he writes for the church that are classified as “Christian Music” get treated differently by the performing rights societies (PROs)?

The inference that a song is penalized in some way by an organization collecting royalties is not correct, but the songwriter was onto something. Songwriters who write music categorized as Christian often do feel they earn less than their secular counterparts. There needs to be an explanation as to why the perception exists and what can be done to change it.

The explanation goes back to how performance royalties are collected. They flow from three key segments of the market:

Digital service providers (DSPs), such as Spotify and Apple Music

General licensing from bars, nightclubs, restaurants, and live venues

Broadcast media including terrestrial radio and television stations

All genres are treated equally on digital services, in terms of tracking, but Christian music is not your typical soundtrack at most bars, nightclubs and restaurants. And venues for Christian music concerts tend to be small community locations, such as churches. Promoters at these venues are unaware (either genuinely or deliberately) that licensing is required, even though they are holding a commercial concert with ticket sales.

That leaves television and terrestrial radio, and this is where I believe the system is fundamentally broken. The Copyright Royalty Board (CRB) allows “educational” radio stations, typically small nonprofit community stations, to operate with a significantly lower rate structure that is not set on a percentage of revenue such as commercial stations, but rather a fixed fee structure based on the population of the community where the station is located.

For example, here in New York City the station WPLJ 95.5FM broadcasts Christian music to more than 8 million people, and in 2023 will pay a capped amount of performance licensing fees to ASCAP, BMI and SESAC, a total of $15,029, combined. These fees will not vary, no matter how much revenue is generated by the station.

WPLJ is part of the Educational Media Foundation, a 501(c)(3) nonprofit organization that runs a network of almost 500 terrestrial radio stations that broadcast Christian music. They claim the lower non-commercial rate under Section 118 of the Copyright Act and the related CRB rules because it is a nonprofit. When you look at the network’s publicly available information and the CRB rate sheet, you can see that they are paying an estimated combined total of around $1 million dollars in performance license fees.

It may seem reasonable for a non-profit to pay such limited amounts to perform music. But here is where the current regulatory regime is broken. The publicly available 2022 financials show the nonprofit collected $238 million in revenue, primarily through donations and sponsorships to the Christian content focused broadcast network. The network now has over $1 billion in assets, adding $50 million to those assets in 2022. Additionally, the salaries of the executive team for 2022 totaled $5.4 million. This is a far cry from the small volunteer-run community stations the CRB rates are meant to protect. How can it be that executives earn more than five times the total amount the network pays the entire song writer and music publisher community that create the songs upon which its network depends?

It must be said very clearly this network and others like it have done nothing wrong and they are a great resource to the wider community. However, just because it’s not wrong doesn’t make it right. I believe that it’s inherently unfair for these networks to exploit the CRB rate structure that’s available to educational radio stations given their financial profiles and the significant amount of money they raise using music to build a large audience. No matter how much money large non-commercial networks collect, and in this case primarily using Christian music to generate those revenues, the CRB license fee structure is capped. Commercial radio pays rates that are generally set as a percentage of revenue and not capped. Many high-earning Christian stations are paying as low as 10% of what commercial stations earning the same revenue would pay.

So back to the songwriter who felt his work was penalized. The answer is yes, he’s partially right; he is indeed paid less, but not due to prejudice on the part of PROs. The lower earnings are due to the lower royalty fees collected across the broader market that uses Christian music.

If we and the Christian songwriter and publisher communities believe that Christian songwriters should be paid on par with other writers, then the PROs as well as the Church Music Publishers Association (CMPA), should work together to create a dialogue with these high- earning broadcasters and ask that they opt out of the CRB rate structure and negotiate fair license fees for the Christian songwriter community. Or alternately, advocate for a revision of section 118 of the Copyright Act that would exclude wealthy “educational” broadcasters. This, along with financial transparency regarding the revenue collected and music licensing fees paid by anyone who gets a US Government-approved discount, should help level the playing field for all songwriters, regardless of what kind of songs they compose.

Malcolm Hawker serves as chief operating officer for SESAC Music Group, where he is charged with overseeing the operations of all the organization’s portfolio companies. Prior to joining SESAC, Hawker served as the president and CEO of CCLI (Christian Copyright Licensing International), a global rights licensing and resource company.