New bill could force US radio stations to pay royalties

If webcasters such as Pandora and iHeartRadio pay statutory royalties to the music industry, why not AM and FM radio?

This is the mindset of six bipartisan members of US Congress. They’ve put the proposed Fair Play Fair Pay Act back on the agenda in Congress.

It is the latest in a number of attempts to readdress what copyright owners say is wrong with US Federal copyright laws.

The powerful media broadcaster sector has argued to retain the status quo, warning it would cause job losses and lead to a situation where radio listeners would no longer be able to hear music for free.

Unlike in many countries, the US has no general performing right for sound recordings. Third parties do not need to get a licence or pay royalties every time they play a track on the radio or in public.

But radio is still required to pay songwriters and publishers for airplay. There is a digital performing right, meaning online and satellite broadcasters need a licence.

In a joint statement, the six Congress members said, “Our current music licensing laws are antiquated and unfair, which is why we need a system that ensures all radio services play by the same rules and all artists are fairly compensated”.

“Our laws should reward innovation, spur economic diversity and uphold the constitutional rights of creators. That is what the Fair Play Fair Pay Act sets out to accomplish: fixing a system that for too long has disadvantaged music creators and pitted technologies against each other by allowing certain services to get away with paying little or nothing to artists”.

For the first 30 years of the rock era, it was understood that airplay was a case of radio providing music for free in return for promotion of their acts.

But when online piracy hit the record labels’ profits badly, and indeed, challenged their survival, label bosses bitterly attacked the way in which radio networks (along with the likes of MTV) had built multi-billion dollar industries on the back of their free records.

The latest proposals ensure that:

• Smaller and independent stations are protected, with terrestrial royalties capped at an annual $500 for stations that earn less than $1 million a year, $100 a year for non-commercial stations; and religious and incidental uses of music not having to pay any royalties at all;
• The introduction of royalties for artists and recording labels will not be used to reduce money paid to songwriters and publishers;
• Artists as well as recording labels will benefit;
• The loophole whereby pre-1972 tracks, not covered by Federal copyright protection, also be fixed to create an income source for heritage acts.

The Recording Industry Association Of America CEO Cary Sherman pointed out that the bill “helps create a more level playing field when music is played on various platforms.

“By doing away with big radio’s subsidy that rips off artists and labels, helping streamline producer payments, fixing the pre-72 loophole to help legacy artists get paid, and finally bringing SiriusXM’s antiquated rate paid to music creators into alignment with its competitors, this bill is much-needed legislation made to fit today’s modern music industry.”

The artist-led US Content Creators Coalition’s President Melvin Gibbs and Executive Director Jeffrey Boxer said the major media organisations needed to play fair.

“For decades, artists have been forced to let their music generate billions of dollars of advertising profit to the corporate investors of radio companies while not being paid one cent for their art. It is past time for Congress to right this wrong.”

The National Association of Broadcasters (NAB), which represents the radio industry, warned of job losses in radio if the bill was passed in its current form.

Gordon Smith, NAB’s President and CEO, responded, “NAB remains committed to working with Congress on balanced music licensing proposals that help grow the entire music ecosystem, promote innovation, and recognize the benefit of our free locally-focused platform to both artists and listeners.”

The NAB instead supports a separate piece of legislation, the Local Radio Freedom Act, which opposes “any new performance fee, tax, royalty, or other charge” on local broadcast radio stations. That bill has 165 cosponsors in the House of Representatives and 21 in the Senate.