Question About FCC Policy Regarding "Barter Ads" on Non-Commercial Radio

Hi Everyone.

I run a small internet radio programming service which offers its programming for free to several small college and LPFM stations in the US. I am having a dispute with one of the program hosts on my station.

The host wants their program to have a lot of polished, professional aspects to it, such as jingles, sweepers, and other elements. I have no problem with this at all, even though it is a bit irregular for college and community radio. Anyway, as we all know, those elements cost money, and lots of it! The host has told me that she wants to sell "barter ads" on her show. In other words, she would charge businesses for an ad, but, the revenue generated by that ad would go back into her program, paying for the production elements she desires for the show. So, the host would not be making a profit, and, more importantly, none of the college or LPFM stations carrying the show with the barter ad inserted would be making a profit either.

Are "barter ads" okay on non-comm radio? Or does the FCC still consider them to be a form of commercial advertising, and therefore, we could not legally run them without risk of being fined?

My assumption is that the FCC does not allow barter ads to run on non-comm stations. The program host contends that there is nothing in the FCC rules that specifically forbids non-comms to run barter ads. So, if it is not allowed, could someone please point out where that is stated in the regs?

What this will come down to is, if the host cannot run ads to finance her show, she is either going to charge stations for the rights to carry the program, or, the show will likely cease production entirely. While I value the host and her program, I do not have the money to pay for programming on my service, and I refuse to charge the radio stations using the service. At the same time, I'll be damned if I'm going to knowingly and willfully violate FCC regs, or put my partner stations in a situation where they are committing such a violation.

Any input from those "in the know" would be greatly appreciated.

Jason Longwell
Station Manager
Global Community Radio

It is legal for non-commercial stations to carry Underwriting, a very specific use of words that are factual but not competitive, do not compare and do not offer a call to action. To air 'commercials', whether paid or traded/bartered is illegal and can subject a station to very substantial fines. There are 'unwritten' rules such as listing too many services or products (called menuing). Stations have been fined for this too. In addition, length of the announcement should be 'as suggested by the FCC' not to exceed 20 seconds and must identify the sponsor as a donor. In a separate advisory from the FCC, it was suggested the average number of Underwriting units should not exceed 6 per hour. While that was mentioned only once, many non-commercial stations have no issues running running as many as 35 in an hour although they are bundled as a few Underwriters per unit and typically limited to peak listening hours. A good rule of thumb is about 3 minutes an hour as a maximum.

Underwriting can be exchanged for cash, services or products or any percentage of any of those that meets the Underwriter's standards.

It appears your programmer does not have a clue and really needs to do a google search for Underwriting on non-commercial stations. There is much that has been written. Most station websites give examples of what can and cannot be said according to FCC Rules.

Quite frankly, I'd be afraid, very afraid about what I'm sending non-commercial stations regarding this programmer's show.

Let the person charge stations. Everyone will drop the program like a hot potato. Charging a station that offers clearance is moronic, even streaming stations (you have enough fun with Sound Exchange, ASCAP, BMI and SESAC to have to worry about a program that now wants money as well). College and LPFM stations typically have zero budget to 'buy' programs and would typically feel locally originated programming a better option anyway.

Global Community Radio said:

My assumption is that the FCC does not allow barter ads to run on non-comm stations. The program host contends that there is nothing in the FCC rules that specifically forbids non-comms to run barter ads. So, if it is not allowed, could someone please point out where that is stated in the regs?

Click to expand...

He's right, barter advertising is not specifically banned, because that's not necessary. All advertising is banned on non-commercial licensees.

The key thing is not whether or not it's barter, but that it's advertising. So the WORDING of it is the legal issue. If it's worded as an advertisement, then it's illegal. If it's worded as a funding announcement, saying "Funds for my show come from Joe's Pizza, located at 1313 Main Street," you're probably OK. But the minute you say "Go to Joe's Pizza for the best ingredients and lowest price," you're in trouble. I always recommend checking copy with a lawyer, but that would also cost money.

I shall offer a little clarification on this.

An Underwriting Credit (aka spot) should be, per the advice, not rule, of the FCC be 20 seconds or less. The FCC says the longer the spot, the better the chance you will violate rules.

A credit can include:
The name of the donor
the address, phone number, website (I have not seen an instance when a fine was issued for all three being used but see the bottom example).
a slogan, as long as it does not break the existing rules (Walmart could not use the slogan "Low Prices Every Day")
Products or services offered (be careful here and limit it to two or three...see bottom)
Brand Names (again, see bottom)

You cannot compare the Underwriter with others , make the Underwriter appear to be the best choice or better choice or anything else that might persuade the listener to choose that business over a competitor. You have to use your brain on wording.

Long ago a lawyer's spot said "practicing law for over 30 years from the same location". The FCC said the announcement gave the attorney an 'unfair advantage' over attorneys that had been practicing law for fewer years although it is legal to say how long the business has been operating. You'd be okay, for example, saying "First State Bank, serving the financial needs of our area since 1904". Why? An attorney is chosen based on experience, a bank is not.

Likewise, a tow truck company saying they offer 24 hour service might be fine but it would generate a fine if you add they don't charge extra for night and weekend calls. That gives them an advantage over competitors. You must ask yourself why such a statement is included. If the reason is to persuade, then you cannot say it. To say 24/7 service is informative. That you don't charge extra for nights and weekends is simply to have an unfair advantage over competitors, to persuade customers to use them for this reason.

Banks, for example, cannot say what interest they pay on CDs and such. For example they could not offer "free checking" because not every bank does. An auto repair shop cannot offer to check your tire inflation free in a credit. An insurance agency could not offer free calendars, just stop in and take one. These are designed to persuade customers to choose their business.

The official terms: No qualitative or comparative statements.

Calls of action are illegal. Here's what this means. You can give contact information but you cannot direct listeners to phone, stop by or go to a website. For example you cannot say "give them a call" or "go to the website" or "Drop by 1234 Main". You can say "the phone number is 555-1212" or "Online at www.anybusiness dot com" You can say "offices at 1234 Main Street".

Likewise, it is illegal to say "As a thank you to KXXX listeners, you can get a 10% discount today only". This equates to pricing that is illegal and such pricing is a call to action because it is for a limited time.

You cannot say, for example, "EZ Oil and Lube, home of the 10 minute $14.95 oil change". But think harder: it is a violation to say "home of the 10 minute oil change". That one, while not price and item is competitive indicating other competitors take more than 10 minutes.

Tossing in a monkey wrench, what if the business name indicates competitive advantage: "Joe's Discount Appliances" or a home furnishings shop really named "Real Deals on Home Decor". These would be okay because if that is the legal name of the business as in their DBA, the FCC says you must identify the donor business. So, that trumps all.

You cannot be repetitive. For example, you cannot say "The phone number is 555-1212, again, that's 555-1212"

Last: This is the below reference: "Menu Listing". If you go to the FCC website to read the Underwriting Rules it never mentions "menu listing". WOBO got fined. Here are the credits. You will see they clearly abide by FCC Underwriting Rules, at least those that are written. However the 'unwritten' menu listing is what got them a $3,000 fine:

Birch Sheet Metal and Building Supplies in Walton, Kentucky, “featuring custom metal roofing, siding, hardware, trim, insulation, trusses, and perma felt paper.”

Fedders Feed and Seed and Pet Supplies in Covington, Ky., “featuring bulk and bag mulch, peat moss, potting soil, bulk top soil and decorative borders.”

You will notice there are 7 items listed for Birch and 5 items listen for Fedders. The FCC's response is quoted:

“We find that these excessively detailed menus of multiple product/service offerings by underwriters exceed the type of information that would enable listeners to identify supporters of noncommercial programming and are similar to promotional broadcasts that have resulted in monetary forfeitures.”

One of the larger Public broadcasters, Minnesota Public Radio details what they offer:
You can use up to 40 words that may include:
1) general location of your business
2) up to three trade names, product names, or service listings
3) factual, value-neutral descriptions of products or service
4) length of time your company has been operating
5) established slogans that identify but do not promote
6) web address

How about an example:
"Support provided by Joe's Discount Appliances at 120 Main Street in Greenville, carrying Maytag, G.E. and Amana home appliances from refrigerators to blenders. "Hometown Proud", Joe's Discount Appliances, serving Greenville since 1934, online at Joe's Discount Appliances dot com."

Notes: I intentionally used "Joe's Discount Appliances" because it is the legal name of the business, the DBA, if you will. The word Discount would be a violation of FCC Rules otherwise. "Hometown Proud" might be a stab at a chain appliance store in town but Joe's has used this "Hometown Proud" in all their marketing for many, many years, therefore it is an established slogan that does not promote. While the Underwriter was mentioned more than once, it was a natural use of the name versus intentionally to be competitive.

In my mind and by my understanding this text would abide by FCC Underwriter Rules. If you find something questionable in the above, please share.