Artists Seek A Share

by Steve Harvey. Radio broadcasters and the music industry are once again squaring up to do battle over legislation that would require terrestrial radio stations in the U.S. to compensate the performers behind recordings played on air. The Performance Rights Act, which enjoys bipartisan and bi-cameral support, was reintroduced in February and in March is scheduled to go before the House Judiciary Committee, chaired by John Conyers (D-MI), co-sponsor of the bill, along with Darrell Issa (R-CA) and others.
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by Steve Harvey.

Radio broadcasters and the music industry are once again squaring up to do battle over legislation that would require terrestrial radio stations in the U.S. to compensate the performers behind recordings played on air. The Performance Rights Act, which enjoys bipartisan and bi-cameral support, was reintroduced in February and in March is scheduled to go before the House Judiciary Committee, chaired by John Conyers (D-MI), co-sponsor of the bill, along with Darrell Issa (R-CA) and others.

The avowed intention of the bill, H.R. 848, is "to provide parity in radio performance rights." According to a statement from the co-sponsors, the bill takes a first step by "ensuring that all radio platforms are treated in a similar manner and that those who perform music are paid for their work." Songwriters already receive royalties for airplay.

Judiciary Committee chairman Patrick Leahy (D-VT) and former chairman Senator Orrin Hatch (R-UT) have introduced a companion bill in the Senate. "I want to ensure that the performing artist, the one whose sound recordings drive the success of broadcast radio, is compensated fairly," stated Sen. Leahy. "Our legislation, appropriately, permits noncommercial stations to take advantage of the statutory copyright license subject only to a nominal annual payment to the artists. Similarly, we intend to nurture, not threaten, small commercial broadcasters. Smaller music stations are working hard to serve their local communities while finding the right formula to increase their audience size. I will continue to work with the broadcasters--large and small, commercial and noncommercial--to strike the right balance."

David Rehr, president/CEO of the National Association of Broadcasters (NAB), fired back immediately with a letter on behalf of the country's 14,000 local radio stations, which reach 235 million U.S. listeners weekly, urging Speaker Nancy Pelosi not to support the bill. Rehr noted that Congress has recognized the symbiotic relationship and "the inherent value of free radio promotion to record labels and artists" for decades by defeating previous attempts to legislate performance royalties--which he characterizes as a "performance tax." Similar legislation has been considered by about two dozen Congresses since the 1920s.

Supporters of the legislation have pointed out that the U.S. stands alongside Iran, China and North Korea in not compensating performers when their recordings are played on the air. As a result, foreign radio stations do not compensate U.S. performers for airplay. Daryl Friedman, VP of advocacy and government relations for the Recording Academy, has been quoted as saying that the absence of reciprocity means that U.S. performers are losing out to the tune of "tens of millions to hundreds of millions" of dollars.

Opponents of the performance royalty have countered that while the bill claims to be about compensating artists, it will be the record labels that gain the most. As Rehr stated in his letter, "In actuality, at least half of this fee will go directly into the pockets of the big record labels, funneling billions of dollars to companies based overseas." Three of the so-called Big Four major record label groups are foreign-owned.

There is certainly a large pile of money at stake, and with the current state of the economy, emotions are consequently running high. Record sales have been in decline for some time, and the bill's opponents have referred to H.R. 848 as a "bailout" rather than an attempt to promote fairness. There are also those in the radio industry who claim that a levy could force some stations to close, in the same way that webcasting fees have led to the demise of some internet broadcasters.

Indeed, the new bill has reopened the debate over the webcasting royalty fees imposed by the Copyright Royalty Board. Jonathan Potter, executive director of the Digital Media Association (DiMA), while agreeing that sound recording performance rights are an important issue for legislation, recently took the opportunity to state, "If establishing 'parity' is Congress's goal, then the final legislation should be technologically neutral and should thereby ensure that internet radio is no longer disadvantaged compared to other radio platforms. Simply put, royalty rates for internet radio should not be determined by an experimental rate-setting standard that repeatedly causes industry disruption and calls for legislative change, while rates for cable and satellite radio are determined by a long-standing, common-sense approach that results in fair outcomes."

But at a Grammy town hall meeting to rally support for the bill held in Los Angeles just before the recent awards ceremony, Rep. Issa noted that the legislation includes provisions for small and non-commercial broadcasters. He also dismissed the NAB's assertion that its members would be required to pay as much as $7 billion. "Give us the counter-offer," Issa was reported as saying. "We'll cut a deal...if you need time to adjust your business model, we'll work with you."