Copyright reform is the agenda of a new bill introduced to Congress by Rep. Doug Collins of Georgia. Called the Songwriter Equity Act, the bill seeks to amend portions of the U.S. Copyright Act, removing existing music-licensing restrictions and addressing what the bill’s sponsors call inequity in current regulations. The Songwriter Equity Act is backed by the three major agencies which collect and distribute royalties to composers and songwriters — ASCAP, BMI, and SESAC.
In making its legislative case, the Songwriter Equity Act is targeting what its sponsors believe is the source of problems: purportedly artificial restrictions in the Copyright Act that prevent rates from evolving in a relatively free market.
The most glaring imbalance in how royalties are assessed and paid exists in the Internet radio space, where market leader Pandora pays nearly half its revenue to record labels and recording artists, but less than two percent to ASCAP for distribution to composers of the same songs. According to BMI, adjusting the songwriter rate by measuring it against the record-label rate is against the law — each rate must be examined without benchmarking the other. “The inequity caused by this current restriction has resulted in songwriters and composers receiving 12 times less than the compensation record labels and artists receive for a performance, or ‘stream,’ of the same song,” BMI states.
Things are different on the broadcast side, where songwriters enjoy a royalty advantage. AM/FM radio is not required to pay labels anything. Stations pay songwriters 1.7% of revenue. BMI distributed over $800-million to its client composers and publishers in its fiscal 2013. (BMI and ASCAP collect royalties from radio, online services, television, and live venues.)
In the complex realm of music licensing, it can appear that nobody is happy:
- Record labels receive zero required payments from thousands of radio stations that play their products. (Labels do receive mandated revenue from online services.)
- Songwriters and composers do receive government-regulated royalties from radio stations, and also from streaming services — but are insulted by the payout level.
- Webcasters feel disadvantaged by the requirement to pay for recorded music, when broadcast radio does not have to.
- Musicians are up in arms about the entire disruption of the music business, which has seen the dismantling of the CD into single-song files, and the migration away from ownership to music streaming and subscribing.
The complexity of licensing music that has multiple owners, by multiple platforms and technologies, is daunting.
Perceived inequities are being argued and addressed in different venues. Pandora and ASCAP are fighting a courtroom battle to determine composer/songwriter royalty rates for a five-year statutory period which starts two years from now. On a bigger stage, the U.S. government’s Copyright Royalty Board (CRB) has started a two-year litigation process to establish performance royalty rates from webcasters that will affect record label earnings from 2016 to 2020. The country’s largest radio group, Clear Channel, made a deal with one of the largest record label groups, Warner Music Group, to pay WMG for broadcast use, and has extended similar deals to smaller labels.
Even if there is general agreement that U.S. music-licensing regulations are outdated, reform is challenged by stakeholders digging in around existing benefits. In this case, the National Association of Broadcasters opposes the songwriter bill, asserting that it would be unfair to burden radio by inflating an existing cost. The NAB pointedly refers to “free broadcast radio stations,” obliquely underlining the fact that terrestrial radio does not offer subscriptions or charge for listening to raise supplementary revenue.
NOTE: Join the conversation! RAIN Summit West will feature a “Royalties and Revenue” panel. David Levin from BMI and legal expert David Oxenford will both speak. The event is April 6 in Las Vegas.