Could new bill force US radio stations to pay royalties?

Could new bill force US radio stations to pay royalties?

On the same week that the House Judiciary Committee passed 27-1 the new bill aimed at making the Register of Copyrights a Presidential appointee, another bill that has been eagerly anticipated by the recorded music industry and performers has been pushed forward.

A bipartisan group of members of Congress have re-introduced a bill known as the Fair Play Fair Pay Act, which calls for terrestrial AM/FM radio stations to pay royalties on sound recordings. Currently, only non--interactive streaming services such as Pandora and Sirius XM pay these rights to record labels and performers through rights society SoundExchange.

The bill is a joint effort from congressman Jerrold Nadler (D-NY), ranking member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, and congressman Marsha Blackburn (R-TN), chair of the energy and commerce subcommittee on communications and technology, along with Judiciary committee ranking member John Conyers, Jr. (D-MI), chairman of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, congressman Darrell Issa (R-CA), judiciary committee member congressman Ted Deutch (D-FL), and congressman Tom Rooney (R-FL).

“Our current music licensing laws are antiquated and unfair, which is why we need a system that ensures all radio services play by the same rules and all artists are fairly compensated,” said Nadler, Blackburn, Conyers, Issa, Deutch and Rooney. “Our laws should reward innovation, spur economic diversity and uphold the constitutional rights of creators. That is what the Fair Play Fair Pay Act sets out to accomplish: fixing a system that for too long has disadvantaged music creators and pitted technologies against each other by allowing certain services to get away with paying little or nothing to artists.”  

According to the sponsors of the bill, the Fair Play Fair Pay Act would:

- Create a terrestrial performance right so that AM/FM radio competes on equal footing with its Internet and satellite competitors who already pay performance royalties. For the first time, music creators would have the right to fair pay when their performances are broadcast on AM/FM radio.    

- Bring true platform parity to radio so that all forms of radio, regardless of the technology they use, pay fair market value for music performances. This levels the playing field and ends the unfair and illogical distortions caused by the different royalty standards that exist today.    

- Ensure terrestrial royalties are affordable capping royalties for stations with less than $1 million in annual revenue at $500 per year (and at $100 a year for non-commercial stations), while protecting religious and incidental uses of music from having to pay any royalties at all.    

- Make a clear statement that pre-1972 recordings have value and those who are profiting from them must pay appropriate royalties for their use, while we closely monitor the litigation developments on this issue.    

- Protect songwriters and publishers by clearly stating that nothing in this bill can be used to lower songwriting royalties.    

- Codify industry practises streamlining the allocation of royalty payments to music producers.    

- Ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license.

The last three points would also create a new level playing field in the music industry. At present, pre-1972 recordings do not have a copyright at a federal level and this has been a bone of contention between performers and labels and streaming services. There are a series of legal procedures centered on pre-1972 recordings, especially the lawsuits filed by Flo & Eddie (formerly of The Turtles) against satellite service Sirius XM.

The point about protecting songwriters and publishers is also important as there was serious concern among publishers and songwriters that if a performance royalty on sound recoding was introduced, it could be at the detriment of the current royalties on compositions. The law would ensure that the level of royalties paid to songwriters and publishers would not be affected.

And the third point refers to the sticky notion of transparency in the streaming world. Performers have voiced their worry that if labels were to make direct deals to collect these performance rights, they would also collect the performers' share and redistribute it to performers (at the moment, SoundExchange distributes directly to performers). The law would ensure that performers get their "fair share."

The passing of the bill is not guaranteed. The music community will find strong opposition from the National Association of Broadcasters, which represents the vast majority of the country's radio groups, and has constantly used its might to prevent performance rights from becoming a reality. The organisation has been pushing for its own legislation, the Local Radio Freedom Act, which has been sponsored by 165 House Representatives and opposes "any new performance fee, tax, royalty, or other charge" on local broadcast radio stations.

In response to the introduction of the Fair Play Fair Pay Act, NAB president and CEO Gordon Smith said that NAB "respectfully opposes the legislation reintroduced by Rep. Nadler that would impose a job-killing performance royalty on America's hometown radio stations. NAB remains committed to working with Congress on balanced music licensing proposals that help grow the entire music ecosystem, promote innovation, and recognise the benefit of our free locally-focused platform to both artists and listeners" Smith added that the Local Radio Freedom Act "acknowledges broadcast radio's indispensable role in breaking new artists and promoting record sales."

Music industry representatives were quick to lend their support to the Fair Play Fair Pay act. Daryl Friedman, chief industry, government and member relations officer of The Recording Academy, which organises the Grammy Awards, said, “As momentum builds for congressional copyright reform, the Fair Play Fair Pay Act is a core issue. Radio is the only business in America that can use another’s property without permission or compensation. The bill protects small stations and only asks corporate radio to do what internet and satellite radio already do: compensate the creators who record the music that drives their business."

“This bipartisan legislation, together with recent developments that demonstrate strong support for the performance rights of artists, shows clear momentum for reaching a solution to copyright reform that establishes free market pay for all music creators and technology-neutral rules for music services," commented Chris Israel, Executive Director of musicFIRST, a coalition of music industry groups.

Melvin Gibbs, president of the Content Creators Coalition (c3), and Jeffrey Boxer, executive director/general counsel of c3, said: "This bill sets the stage for the AM/FM performance right to be included in any copyright licensing reform. Big corporate radio’s hollow arguments and Potemkin resolutions have worn thin – and failed to stem the tide of progress."

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