5 Laws Maine Small Businesses Need To Know When Advertising on Radio

Portland Radio Maine Small Business Rules RegulationsEvery week, 93% of adults in southern Maine tune-in to a Portland radio station. The airwaves used to link listeners with their favorite station are owned by the public. Consequently, broadcast stations are accountable to these owners for the content that is disseminated.

When it comes to commercials, the public depends on agencies of our government to determine what Maine small business owners are prohibited from including. Among these entities protecting the airwaves are The Federal Communications Commission (FCC); The Federal Trade Commission (FTC); and the U.S. Copyright Office (USCO).

There is a slew of rules, regulations, guidelines, and polices that pertain to broadcasting commercials over the public’s airwaves. There are 5, however, every Maine small business owners should know before placing ads on Portland radio. Here they are, in no particular order. So, in the words of America’s greatest legal authority, Taylor, Swift, “Don’t say I didn’t say I didn’t warn ya.”

Rule 1: It must be clear who is paying for your commercial.

The FCC mandates in its rules (CFR 73.1212), “When a broadcast station transmits any matter for which money, service, or other valuable consideration is either directly or indirectly paid or promised to, or charged or accepted by such station, the station, at the time of the broadcast, shall announce that such matter is sponsored, paid for, or furnished, in whole or part, and by whom or on whose behalf such consideration was supplied.”

Specifically, in section (f) of this rule: “In the case of broadcast matter advertising commercial products or services, an announcement stating the sponsor’s corporate or trade name, or the name of the sponsor’s product, when it is clear that the mention of the name of the product constitutes a sponsorship identification, shall be deemed sufficient for the purpose of this section and only one such announcement need be made at any time during the course of the broadcast.”

How does this apply to Maine small business owners?

Recently a local concert promoter wanted to purchase a commercial campaign to announce that a major rock star would be performing at a Portland area venue. The problem was, the promoter was never mentioned in the commercial. It was not sufficient just to mention the performer or the venue since neither contributed to the cost of the commercial. Sadly, the advertiser needed to take the time and money to change the commercial to make it compliant.

In another example, a local Maine business owner was opening a new restaurant in the Midcoast area. In advance of the opening, the owner wanted to run a series of 10-second commercials that proclaimed, “Prepare. A new taste is coming to Topsham on March 13th. “

Despite the creativity, this commercial could not be run since it was not made clear who was paying for the ad.

Rule 2: You cannot use Born To Be Wild In a Motorcycle Commercial

Article 1 of the United States Constitution is responsible for the fact that a jewelry store can’t use Beyonce’s song “Single Ladies (Put a Ring on It) in a radio commercial. Not even 5-seconds of it. Probably not even 2 seconds of it.

portland radio maine small business copyrightTo encourage innovation, entrepreneurship, and artistic endeavors, the framers of the Constitution granted writers, artists, and scientists exclusive rights to profit from their creations for a limited period of time.

According to Thomas Welch, a Maine attorney who specializes in intellectual property rights, “Copyright law is currently embodied in Title 17 of The U.S. Code and is commonly referred to The Copyright Act of 1976. Under the law the exclusive right to use, perform, sell, or license copyrighted material is afforded to literary works; musical works including any accompanying words; dramatic works including any accompanying music; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings and architectural works.”

The framers of the Constitution did not intend for copyright protection to last forever, however.  But don’t expect to use “Born To Be Wild” in a local motorcycle commercial anytime soon.  According to Mr. Welch, “A copyright on any work, music or otherwise, lasts the life of the author plus 70 years.”  Mars Bonfire, the songwriter of “Born To Be Wild” is still alive, so even if he passed away today at the age of 74, his copyright wouldn’t expire until 2087.

Violating copyrights can be a cripplingly expensive proposition.  According to Mr. Welch, “A person who has been determined to have committed copyright infringement is liable for actual civil damages, including any demonstrable harm and lost profits. In addition, a court may impose statutory damages, ranging from $750.00 to $30,000.00. In some cases, where it is demonstrated that the infringement was willful, statutory damages as high as $150,000 may be imposed.” In a recent copyright infringement case, Frito-Lay was found guilty of using a Tom Waits song, “Step Right Up” sung by a Tom Waits impersonator in an ad for Doritos.  The company was fined $2.4 million dollars. 

There is an urban legend that an advertiser can use up to 7 seconds of a licensed work in their commercial before they have infringed the intellectual property rights of the copyright holder.  Mr. Welch explains, however, “Time isn’t the issue in this type of circumstance. The central issue is the use, and in most cases, specific permission or license must be obtained from the owners or licensors of the copyrighted material regardless of the length or amount of the material that is used.”

Another dangerous approach is parody. Would it be legal for a local travel agent to use the following lyrics sung to the tune of the Gilligan’s Island Theme:

Just call right up and reserve your berth/on a tropic isle trip/Call Bob at Portland Ocean Tours/He’ll book you on a ship?

According to Mr. Welch, “This is a slippery slope, and requires the potential user of the parody to be very careful and consult with someone who knows the law. A parody is generally limited to comedic use that is specifically making fun of the original musical work, rather than some independent commercial value. If it is not a parody, it is not among the categories of fair use, and could subject the user to infringement consequences, including actual damages and statutory damages, which can be in the tens of thousands of dollars.”

Music can be an evocative and powerful component of a radio commercial.  Fortunately, there are options for local advertisers who want to use music in their ads without paying licensing fees or fines for using copyrighted music.  These include:

  • Reputable radio stations maintain a large library of royalty free music to be used in radio commercials. These libraries provide music of all genres and can evoke any imaginable emotion, feeling, or texture.  The library utilized by Portland Radio Group, for instances, contains more than 60,000 pieces of music.
  • Hire a vendor to produce a unique musical signature, jingle, or commercial bed. To learn more about why jingles are effective we suggest the article:  Attack of The Worms: Why Radio Advertising Jingles Work.  There are many companies who provide this service. 
  • Use music in the Public Domain.  This is music where copyrights have expired.  But you must be careful.  For instance, Beethoven’s copyright on his 5th Symphony has expired.  But the Portland Symphony Orchestra’s recording of the 5th Symphony is protected.  As a matter of fact, Portland Radio Group’s production library includes several royalty free versions of The 5th Symphony ranging from orchestral versions to barking dogs version.

By the way, small business owners can now use the “Happy Birthday To You” song in their commercials on Portland radio. A federal judge invalidated the copyright on the song written by the song written by a school teacher during the 19th century.

Rule 3: No purchase necessary isn’t just a good idea, it’s the law.

A local car dealer sent us a script a few weeks ago with an excellent opportunity for customers. The dealer promised that every person who purchased a new car at the dealership during the upcoming weekend would be entered into a drawing to win tickets to an upcoming Boston Patriots game. The only way to win, was to buy a car.

Portland Radio Maine Small Business FCCThis script never actually made it on to the air. It turns out that this type of contest, as far as the FCC is concerned, constitutes a lottery and cannot be advertised.

Under rule 73.1211, the FCC says that any licensee of an AM or FM broadcast station shall not broadcast any advertisement of or information concerning any lottery, gift enterprise, or similar scheme, offering prizes dependent in whole or in part upon lot or chance, or any list of the prizes drawn or awarded by means of any such lottery, gift enterprise or scheme, whether said list contains any part or all of such prizes.

In plain English: if a local business has a contest that offers a chance of winning a prize strictly as a result of purchase, then a radio station (or TV station for that matter) cannot advertise it. Chance, consideration, and prize of value are what makes the car dealer’s contest a lottery.

To run the contest without offending the FCC, then the car dealer had two choices. The first would have been to have an alternative form of entry. For instance, everyone who purchase a car could have automatically been entered into the contest. But, anyone not buying a car could be allowed to enter the contest by submitting an entry slip at the dealership or mailing in some sort of form.

The other tactic available to the advertiser would have been to replace the purchase criteria with a skill-based entry process. Example: customers submit a video of themselves singing the dealership’s jingle. The customer who was judged to sing the best would win the car.

To be certain your contest does not violate Maine lottery laws, it’s always a good idea to seek guidance from Maine’s Gambling Control Board. You can find them at 207-626-3900 or www.maine.gov/dps/GambBoard/

Rule #4: Warning, Will Robinson

One of our regular, small business advertisers uses radio commercials rich with sound effects. These sounds help these ads be heard and remembered. Last month, though, one of the commercials fell victim to the call of the siren.

The conceit of this script of the script was to create a commercial-within-a commercial. It starts with business owner taking to a potential customer about the company’s benefits. This exchange is abruptly cut off by a blaring, emergency siren. The owner than intones, “Sorry to interrupt this commercial, but we have an important job opening that needs to be filled immediately.”

My prosaic description of the ad does not do it justice. Like all the other commercials this business puts on the radio it would have drawn a lot of attention. In this case, the attention might have come from the FCC.

According to communications attorney Gregg Skall, “In 1970 the FCC issued a public notice warning that broadcasters should act responsibly in connection with the use of sirens and other devices that might pose a hazard to the public — and that broadcasters should be aware of possible adverse consequences. In that notice, the Commission reiterated that the selection and presentation of advertising and other promotional material is generally left to the editorial discretion of licensees. The Commission also emphasized that with that authority comes responsibility – the time-honored principle that the licensee is liable for what it broadcasts even extends to commercials.”

“The Commission has applied this guidance in an enforcement action, continued Mr. Skall. “In 1991, a station was fined for an on-air talent using an air-raid siren sound effect followed by two explosions and an EBS tone. That prank was not a case of trying to draw attention to a commercial, but the FCC used it to make its point about any device used as a signal of distress or emergency. The Commission cited Section 325(a) of the Communications Act, which states, in pertinent part:

No person within the jurisdiction of the United States shall knowingly utter or transmit, or cause to be uttered or transmitted, any false or fraudulent signals of distress, or communication relating thereto. . . .

The Commission made it clear that it will sanction a station for incorrect use of a siren or any other signal of emergency or distress.”

Rule 5. Yes, Jack, We Can Handle The Truth

Being truthful is enshrined in our most ancient learning. “Thou shall not bear false witness,” advises the 8th biblical commandment (or 9th, depending on your faith). “Honesty is the best policy,” advised Ben Franklin. “No legacy is as so rich as the truth,” opined William Shakespeare.

Portland Radio Maine Small Business FTCWhen consumers see or hear an advertisement, whether it’s on Portland radio or anywhere else, federal law says that ad must be truthful, not misleading, and, when appropriate, backed by scientific evidence. The Federal Trade Commission (FTC) enforces these truth-in-advertising laws, and it applies the same standards no matter where an ad appears – on radio, on TV, online, in the mail, etc.

When the FTC finds a case of misleading or fraudulent advertising, the agency files actions in federal district court for immediate and permanent orders to halt the advertising. The FTC can also freeze the assets of the less-than-truthful advertisers and distribute them as compensation for victims.

Even the most well-meaning Maine advertisers can attract the attention of the FTC by not understanding the rules. This is especially likely when it comes to product claims and consumer endorsements.

Sometimes, Maine small business owners will have someone in their radio commercial who is posing as a satisfied customer. The supposed customer talks about the wide selection of products and services the business owner offers. They may talk about how knowledgeable the business owner is. They may even talk about the plentiful parking available in front of the business. This is a violation of the rules.

According to the FTC, “Advertisements presenting endorsements by what are represented, directly or by implication, to be ‘actual consumers’ should utilize actual consumers in both the audio and video, or clearly and conspicuously disclose that the persons in such advertisements are not actual consumers of the product.”

Another way a business owner can induce sin is to make claims about its products or services that cannot be substantiated or are atypical. The FTC provides this example:

“An advertisement disseminated by a company that sells heat pumps presents endorsements from three individuals who state that after installing the company’s heat pump in their homes, their monthly bills went down by $100, $125, and $150 respectively.”

“The ad,” continues the FTC example, “will likely be interpreted as conveying that such savings are representative of what consumers who buy the company’s heat pump can generally expect. The advertiser does not have substantiation for that representation because, in fact, less than 20% of purchasers will save $100 or more.”

The FTC goes on to say, “A disclosure such as, ‘Results not typical” or, ‘These testimonials are based on the experiences of a few people and you are not likely to have similar results’ is insufficient to prevent this ad from being deceptive because consumers will still interpret the ad as conveying that the specified savings are representative of what consumers can generally expect.”

The FTC that the heat pump ad is less likely to be deceptive “if it clearly and conspicuously discloses the generally expected savings and the advertiser has adequate substantiation that homeowners can achieve those results. There are multiple ways that such a disclosure could be phrased, e.g., ‘the average homeowner saves $35 per month’ ‘the typical family saves $50 per month during cold months and $20 per month in warm months,’ or “most families save 10% on their utility bills.”

The bottom line, when advertising on Portland radio, Maine small business owners should be prepared to demonstrate that the claims they make about their products or service represent the results a typical consumer should expect. Doing otherwise could result in hefty fines from the FTC.

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