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House hearing #2 re-treads music licensing issues; hammers radio on performance royalties

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The Judiciary Committee of the U.S. House of Representatives held its second hearing on music licensing regulations, hosting a panel of music-industry executives who delivered prepared statements and answered questions.

Four issues

As with the first hearing on June 10, four contentious issues framed today’s proceeding:

  • Broadcast radio’s exemption from performance royalties
  • Pre-1972 recordings unprotected by copyright, and receiving no royalties
  • Uneven payments across different types of musicians
  • Consent Decrees which govern how ASCAP and BMI collect and distribute songwriter royalties

All four pillars of copyright discontent got some play today. Broadcast radio took a severe beating, by congressional representatives and witnesses for its exemption from paying artist/label royalties. Unlike the first hearing, though, terrestrial radio was represented on the witness panel (Charles Warfield, National Association of Broadcasters and Ed Christian, Radio Music Licensing Committee).

Toward the end of the three-hour session, the question of whether pre-1972 recordings should be paid for received much scrutiny, with the entire panel agreeing in principle that the current law (which leaves oldies unprotected) isn’t logical.

The label perspective

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Cary Sherman, RIAA

Cary Sherman, president of the Recording Industry Association of America (RIAA) offered a broad complaint and prescription for solving common music-licensing complaints. Unsurprisingly, he insisted that radio broadcasts should pay a performance royalty to labels and artists, as digital services do (including AM/FM webcasts). “Records are the economic engine that drives the entire music industry,” Sherman remarked. He also advocated for fixing the pre-1972 exemption. “The music business has reinvented itself, but our work is not done.”

Darius van Arman spoke on behalf of the American Association of Independent Music (A2IM): “We need a performance right. It will also give us reciprocity.” His point there was that record labels don’t receive royalties from non-U.S. broadcasters because of the U.S. exemption. “The current music licensing system is broken,” he claimed. “It provides incentives for the wrong behavior.”

Michael Huppe, CEO of SoundExchange, which collects performance royalties for labels and artists, sounded similar themes. the pre-1972 recordings? “It makes no sense as a matter of policy. It is just wrong.” Radio’s exemption? “FM’s tired and stale justifications ring hollow.” Finally, this from Michael Huppe: “The government must get out of the business of picking winners and losers. Businesses should compete on economic values, not the strength of their legal loopholes.”

The radio perspective

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Charles Warfield

Charles Warfield, joint chair of the NAB, promoted radio’s key role in the growth of the music recording industry, as well as its benefits to society generally. “Our unique system of free airplay for free promotion has benefited the music industry for decades. I’ve never had a label executive come to my stations and say, ‘Why are you playing our music?'”

Warfield also, twice during the day, pointed out that [most] digital-only music services cannot make a profit with current statutory rates to labels, and that daunting business reality stops some radio stations from webcasting their signals. He asked for “changes to the law that will promoted a sustainable webcasting model.”

Without question, the most inflammatory rebuttal of the radio-royalty issue came from Ed Christian of the Radio Music Licensing Committee (RMLC), who pushed back against labels this way: “Please understand that the radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital strategy that addresses a decline in its own brick and mortar income.” Nobody had to ask Mr. Christian what he really thought.

The songwriter perspective

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Roseann Cash

Singer/songwrtier Roseann Cash (daughter of Johnny Cash, mentioned here only because the relationship was frequently referenced in the hearing) brought a personal touch to the proceeding’s sometimes dry crunching of legal policy. She advocated for songwriters, and sat in the ASCAP/BMI camp of the licensing debate. “All creative people are entitled to fair compensation when their music is used, regardless of platform.” Cash touched on the pre-1972 question: “If my father were alive, he would not receive royalties for ‘I Walk the Line.’ The injustice defies description.”

Composer and songwrtier Paul Williams sat on the panel from the ASCAP board, of which he is chair. He was certainly the wittiest panelist in the room. at one point comparing the Consent Decrees to his own body, noting that they were born at about the same time, and observing this he functioned better than they did. On policy questions he was sharp. “Regulations that govern how music is licensed are stuck in the distant past, and threaten music.”

Also from Paul Williams: “The stream is the dream; it should not be a nightmare for musicians.”

Pandora and SiriusXM

Chris Harrison, VP of Business Affairs at Pandora, and David Frear, CFO of SiriusXM, represented those two important stakeholders.

Frear said that radio is radio, and that all radio should pay for the music it uses — again, the performance royalty exemption. He called it a “digital disadvantage.” Frear also spoke on behalf of the Consent Decrees, denying that they prevented competition. On the question of whether pre-1972 recordings should be covered by copyright, Frear said he personally disagreed with the current loophole. Chris Harrison also said that pre-1972 performance royalties should become part of federal law (those royalties are now upheld in some states).

Brad Hill

2 Comments

  1. This is a simple problem to solve. There is no doubt artists and writers have benefited by AirPlay. I would ask them how much of their own money would they have had to spend to promote their work if radio did not exist? I believe there is an equal trade off in this respect. Artists and writers benefit from sales if recordings, merchandise and ticket sales that wouldn’t be possible if radio did not play their music and talk about them or even interview them the air.

    Radio is radio no matter how it is delivered. Royalties should be based on a percentage of a stations revenue regardless if its terrestrial, satellite, Internet and so on. Let competition rule and everyone wins. This is a new age and it makes no sense to try and hold on to an old system that’s clearly broken. This really is more complicated than it needs to be.

  2. Broadcast and digital should be treated equally, but non-profit educational programming on both platforms should be exempt from all royalty fees and reporting requirements.

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