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Labels push the moment with musicFIRST campaign for radio royalties

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Of all the issues woven into potential music-licensing reform during this “Summer of Copyright” (part 1 and part 2), none is larger, more publicized, or more intractable than whether broadcast radio should lose its exemption from paying performance royalties.

The latest volley in an ongoing inflammatory argument is by the music-industry advocacy group musicFIRST, which has launched an ad campaign intended to attract the attention of selected legislators in their home districts. Which lawmakers? Specifically, ones who signed a non-binding resolution called the Local Radio Freedom Act, which supports radio’s continued exemption.

Performance royalties are payments for the use sound recordings. The money goes to labels and artists. Radio has never paid ’em (for the most part, excepting private agreements between radio groups and major labels). Internet radio (including radio station webcasts), however, does pay those licensing costs. Pandora, for example, forks over about half of its revenue to SoundExchange, the organization tasked with collecting and distributing those payments from all sources.

It is understandable that musicians (and music labels) see immense potential income on the broadcast side, and are leveraging the inequity between broadcast and streaming to plead a case. In recent weeks the House Judiciary Committee has appeared sympathetic to the musicians’ cause, especially in the second of two hearings in which the witness table was stacked against radio, and the broadcast industry took a rhetorical beating.

Radio defends its exemption turf partly on the basis of historical precedent: the system has worked to the advantage of musicians for decades, lobbyists say, and continues to benefit music through free exposure in a medium that has huge reach, even in the digital age. Broadcast lobbying publicity has called the performance royalty a “tax” that would inflict calamitous damage on thousands of small and midsize local businesses (the stations).

The most incendiary defense of the status quo has come from the mouth of Ed Christian, who rang out this sentence in his House testimony: “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.”

Putting aside all opinions about case merit, the change might simply be too big for Congress to handle, even if musicFIRST changes some minds. Time will tell, during this most fascinating times in the history of U.S. music copyrights.

Brad Hill

One Comment

  1. The idea that the Radio industry is trying to portray itself as “local small business” is ludicrous. What about Clear Channel (Bain Capital), Cumulus, CBS, and a few others who own most of the stations? Radio is no longer a local business and these consolidators do not serve their community of license beyond lip service.
    Yes, Broadcast Radio needs to pay up. It’s long overdue. At the same time homegrown Internet Radio should pay no royalties until annual revenues surpass $100K. What a way to promote creativity and give listeners true choice!

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