Broadcasting (Oct 1931-Dec 1932)

Society Revises Sustaining Fee Scales Greatest Reductions Are Made for Low-Power Stations; Mills Essays to Answer Questions of Broadcasters Copyright Developments Reductions of about 36 per cent in the sustaining fees of the 340 stations of 500 watts and less, and of between 20 and 30 per cent in the sustaining fees of stations in the 1 kw. class, are proposed by the American Society of Composers, Authors & Publishers as a result of conferenpes between E. C. Mills, ASCAP general manager, and Oswald F. Schulitte, representing the broadcasters. In a statement to BROADCASTING, Mr. Mills answers categorically ilthe several questions raised in our Sept, 15 issue as being puzzling to ^broadcasters, according to inquiries received by the NAB. A move for discrimination in favor of 18 newspaper-owned stations, instigated by Mr. Mills and having the earmarks of an effort to split the ranks of the broadcasters, was launched by WDAF, Kansas City, operated by the Kansas City Star. BY SOL TAISHOFF jALTHOUGH definite progress is •being made in the downward readjustment of sustaining fees for •|!stations in the lower power cate• gories, all is not tranquil in the jmusic copyright negotiations with -the American Society of Composers, Authors & Publishers. Following a series of conferences ;with Oswald F. Schuette, copy! right director of the NAB, acting in behalf of the industry, E. C. Mills, ASCAP general manager, had his accountants draft a revised sustaining fee scale affecting all stations of 500 watts and less and proposing an average reduction of about 36 per cent. To the f majority of stations in the 1 kw. 1 class, reductions of between 20 and I 30 per cent were offered. Other sustaining fee items were proposed, and conferences are now in progress for the readjustment l! of all classes of licenses. The new scale, accepted "under protest" six weeks ago, becomes effective Oct. 1 for all stations of 500 watts and less, Mr. Mills said, and has not been deferred until Nov. 1. with Mr. Mills and had urged that the "contribution" of newspapers to music was such as to warrant elimination of the sustaining fee altogether. Press Boosts Music MR. FITZER wrote frankly that Mr. Mills had suggested the letter to the newspaper stations, had handed him the list of the stations to which the letter should be sent and had expressed "a desire to make a more favorable contract for newspaper-owned stations, in view of admitted newspaper contribution to music exploitation." He added that the ASCAP official had "expressed a willingness to depart in some measure from the fee standard now scheduled to be charged, providing I could speak for these stations as a group, and hand him a plan." Mr. Fitzer informed the stations that, after his conference with Mr. Mills, the latter admitted that newspapers, by virtue of their gathering and dissemination of news, contributed very definitely to the exploitation and sale of copyright music through the publishing of articles about songs and their composers. "This is the first time over the years," wrote Mr. Fitzer, "that Mr. Mills has come to realize and concede this newspaper contribution to the music business, and the concession is vitally important at this time, because of the immediate demand of Mr. Mills in behalf of the Society from the broadcaster of the '3-4-5 per cent plus sustaining fee' plan, with which you are as familiar as I. "I propose that we, as a group, ask that the sustaining fee be not charged newspaper-owned stations, agreeing to abide by the 3-4-5 per cent plan on a three-year contract. Mr. Mills suggested that I ascertain the wishes of this group, and obtain authority from you to act in its behalf. This is a matter entirely in your hands. I have no wishes in this regard, beyond a desire to arrive at a satisfactory settlement for WDAF, and with no desire whatever to step on the toes of the NAB. In this negotiation, you can readily see the impossibility of NAB acting in our behalf." PENNY PREMIUMS BOOST SALES Bottled Water Company Finds Listeners Respond Better When They Pay Small Fee for Sample Mills Answers Queries WHILE the sustaining fee phase is far from amicably settled, broadcasters are still in a quandary over certain of the provisions in the new contracts regarding the payment of 3 per cent royalties on their "net receipts." In a statement to Broadcasting, Mr. Mills essays to answer the questions raised by broadcasters as reported in the copyright article which appeared in the Sept. 15 issue. While he does clear up certain of the ambiguous provisions his explanations are not conclusive with regard to the major item of "net receipts," and there is a decided note of antagonism toward the NAB in his statement. The most disconcerting action, however, was a move for discriminatory treatment in favor of 18 newspaper-owned stations, suggested by Mr. Mills. This action has aroused the ire of independent broadcasters who have heard about it, and in some quai'ters it was regarded as a veiled attempt on the part of Mr. Mills to split the broadcasting ranks. The letter was sent to the newspaper stations by H. Dean Fitzer, manager of WDAF, after he had conferred By RICHARD M. RICKARD Manager, KGB, San Diego ALTHOUGH Sparkletts Bottled Water Co. has conducted radio campaigns over many western stations, KGB was recently selected for a test campaign with a penny water bottle as the "key" for the account. Improving on past experiences, the sponsors decided not to announce any "free" offers but to make a small charge. They believed that listeners might be more responsive if they paid something for premiums and consequently placed the price of a penny on a two-quart water jar, and then threw in two quarts of deep rock artesian water for good measure. Account was handled by the Los Angeles office of Lockwood, Shackelford agency for the San Diego office of Sparkletts, and it has been running three months with a daily average of 50 calls for the carafe. Although no pressure is brought to bear on carafe purchasers to buy the bottled water later and while no strings are attached to the penny sale, an unusually large increase in customers is resulting from the radio campaign. Sales officials of Sparkletts esti mate that 60 per cent of the water bottle purchasers become actual users of the bottled water service either immediately or within a 30day period. The radio copy includes five floating announcements every day in the week plus the sponsorship of evening dance music for an hour each week day. Sponsors and station officials believe that, while the day of the free offer is by no means past, there is a valuable psychological angle in placing a nominal charge on whatever is offered as a premium. The follow-up system used by Sparkletts is simple and not obnoxious to the fan. When the bottle is delivered and collection of the penny made, the agent explains Sparkletts service and leaves a leaflet. If the householder does not subscribe to the water service within two weeks, a phone call and one more personal solicitation are employed. Actual figures in the hands of the sponsors prove that this penny angle has been instrumental in bringing in more actual and potential business than a previous campaign offering "something for nothing." The list of stations and owners supplied by Mr. Mills, and to which the Fitzer letter was sent are: KGW, Portland Oregonian; KLX, Oakland Tribune; KPRC, Houston Post Dispatch; KSD, St. Louis Post Dispatch; KYW, Chicago Herald Examiner; WAAF, Chicago Daily Drovers Journal; WBAP, Fort Worth Star Telegram; WDAE, Tampa Daily Times; WDAF, Kansas City Star; WGN, Chicago Tribune; WHAS, Louisville Courier & Times; WISN, Milwaukee Sentinel & Wisconsin News; WJAG, Norfolk Daily News; WMC, Memphis Commercial Appeal; WSB, Atlanta Journal; WSBT, South Bend Tribune; WTMJ, Milwaukee Journal; and WW J, Detroit News. Reductions worked out by ASCAP auditors on the sustaining fee would amount to about $120,000, for the 340 stations of 500 watts and less, from the previous figure on the flat-rate basis of $330,000 paid by these stations, or a decrease of some 36 per cent. In behalf of the broadcasters, Mr. Schuette agreed that this reduction is consistent with the understanding that the greatest sustaining fee downward revisions should favor the smaller stations. As to 1 kw. Stations THE SAME sort of horizontal reduction was not offered for stations in the 1 kw. category. While most such stations would be accorded reductions of between 20 and 30 per cent, the Mills' figures proposed no reductions whatever for certain of them. In the case of the higher powered stations reductions were scheduled in a few isolated cases, but the majority would remain about status quo with the original flat-rate annual royalty, plus, of course, the new 3-4-5 per cent of net receipts. In his future conferences, Mr. Schuette will take up individually the case of stations of 1 kw. and above in the hope of arriving at reductions all down the line. Assurances have again been given by Mr. Mills that, while the new scale becomes effective Oct. 1, no infringement suits will be instituted against stations in process of negotiating for their terms. The new copyright policy also provides that stations in the educational, municipal and non-profit-making class, but which operate commercially, will not have sustaining fees to pay, providing they are operating on state or municipal funds and are using their commercial receipts only to defray the costs of operation. Stations licensed to such groups, but leased to private operators, however, will be considered regular commercial stations and be assessed for the sustaining fee. All such stations, however, will be required to pay the percentage royalty. Re "Net Receipts" DIFFERENCES of opinion between Mr. Schuette and Mr. Mills as to the interpretation of "net receipts" and what actually constitutes time on the air have developed. Mr. Schuette insists that it should be strictly interpreted as the money actually earned by (Continued on page 15) October 1, 1932 • BROADCASTING Page 11