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Radio performance royalty debate escalates with new bill giving control of airplay to artists

darrell issa 250wThe battle of the bills continues in Washington, as over-the-air radio’s music royalty exemption is again under scrutiny by the 115th Congress. In the latest development, Congressman Darrell Issa (R-Calif) has introduced a new bill with a new solution which gives artists the right to forbid airplay of their music without payment.

To review the basics:

  • Over-the-air radio in the U.S. is exempt from government regulation of music royalty payments to record labels and artists (whoever owns the master recordings) when radio plays those recordings.
  • Music owners want that money. Online radio does pay labels and artists for use of recordings, creating an uneven marketplace, they say.
  • Radio stations and their chief lobbying champion, the National Association of Broadcasters (NAB) ,obviously don’t want a goverment-imposed new cost in their budgets, saying it threatens the livelihood of countless small businesses (local radio stations).
  • Rep. Jerrold Nadler, D-NY, is the chief instigator of the proposed Fair Play Fair Pay Act, which would establish a royalty liability on terrestrial radio.
  • 165 House members and 21 Senators have signed a non-binding resolution to oppose Fair Play Fair Pay.

Enter Rep. Issa and his PROMOTE bill. PROMOTE is a clever acronym for Performance Royalty Owners of Music Opportunity To Earn. The proposed bill stipulates that artists and labels could withdraw their recordings from airplay, absent a royalty deal, taking the control away from governmental fiat, and distributing that control to individual rights-owners. Here is what Rep. Issa says:

“The PROMOTE Act calls the bluff of both sides in the debate over performance rights. The terrestrial stations playing these works without compensating the artists argue that airtime provides exposure and promotional value, while the artists argue the status-quo allows radio stations to profit on artists’ performances without providing any due compensation. Our bill puts forward a workable solution that would allow those who would otherwise be paid a performance right to opt out of allowing broadcasters to play their music if they feel they’re not being appropriately compensated. This is a win-win that helps solve this decades’ long problem in a way that’s fair to both parties.”

The bill proposes that the royalty rate be identical to what internet radio pays according to the Copyright Royalty Board rulings which occur every five years. The current rate is 17 cents per hundred plays to 100 listeners. that rate is founded on the streaming paradigm, in which one “spin” is heard by one person, amounting to one music impression. Over-the-air radio’s one-to-many paradigm would require some kind of cume calculation of how many people heard the spin.

the swirl of debate is happening in the context of rapidly changing consumer behavior. The historical rationale for exempting radio from paying for music was radio’s immense driver of record sales. As the Recording Institute Association of America (RIAA) recently announced, streaming music now accounts for the majority of industry revenue. In other words, music sales are gradually becoming less relevant as consumer shift from music ownership to music access.

There is a demographic element to that shift. In the 2017 edition of The Infinite Dial, produced by Edison Research and Triton Digital, radio still holds a strong position among music discovery methods. But that position drops radically among young consumer, who lean into YouTube at radio’s expense.

The upshot appears to be that radio’s revenue influence to the record industry is waning, which fuels arguments that the radio platform should be regulated similarly to internet radio.

 

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Brad Hill

7 Comments

  1. Wondering where the small and medium sized webcasters are in all of these discussions. Since Congress is discussing what to do can we micro webcasters get any royalties relief or is that even on the table?

  2. Funny how the press release says the bill would give control to the artists, when the bill itself gives control to the “copyright owner.” Those are not the same thing. No mention of artists in the actual bill. Read:

    “H.R.1914 – To amend title 17, United States Code, to grant owners of copyright in sound recordings the exclusive right to prohibit the broadcast transmission of the sound recordings by means of terrestrial radio stations, and for other purposes.”

    The real scary part is “…and for other purposes.” What does THAT mean?

    • “Copyright owner” and “artist” are sometimes the same, depending on who owns the master recording. At all times, copyright owner and artist sit on the same side of the table when it comes to radio royalties.

      • If any artist wants radio to stop playing their songs, all they have to do is speak up. But that’s not what they want. Where are all the current charted artists on this issue? This proposal is exactly the same as the Fair Play proposal, in that it requires radio to pay the digital royalty rate for analog use. That’s not fair.

  3. “The upshot appears to be that radio’s revenue influence to the record industry is waning, which fuels arguments that the radio platform should be regulated similarly to internet radio.”

    No, the upshot appears to be that the music industry’s pressure on certain Congressmen is increasing. If the goal is that broadcasting should be regulated similarly to internet radio, then the FCC should eliminate ownership rules, indecency rules, payola rules, and all other antiquated regulations that only apply to US broadcasting.

    • “In other words, music sales are gradually becoming less relevant as consumer shift from music ownership to music access.”

      Perhaps, but local radio’s main value now is driving music listeners to concerts. That’s where the real money is made, and local radio is far more valuable than nationally-based streaming or satellite sources for driving people to the shows. With labels participating in concert revenues these days, labels are partners with local radio stations in promoting concerts, both for their developing acts and headliners. That is a fact. Record labels are already benefiting from radio airplay at the box office.

  4. This country is ridiculous. I hope all the artists that want this get NO AIRPLAY at all! Then we’ll see how long that shit lasts. Disgusting the greed in this country!

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