RSSBroadcast radio one step closer to paying performers' royalties
By Scott M. Fulton, III | Published October 16, 2009, 11:48 AM
With the music industry's business model in flux, mostly due to forces seemingly beyond its control, one way of potentially reducing some of the stress from lost CD sales is by Congress lifting terrestrial radio broadcasters' exemption from paying royalties to musical performers -- an exemption that has been allowed since the beginnings of radio. Though a majority of representatives in the US House have voiced opposition to such a measure, a similar majority has yet to coalesce in the Senate.
Yesterday, concerted leadership in the Senate Judiciary Committee passed its version of a bill authored in the house by Rep. John Conyers, Jr. (D - Mich.), effectively striking language from US Code granting radio broadcasters exemption from paying royalties to performers. (Broadcasters currently do pay royalties for copyright holders, typically through annual fees.)
"Radio play surely has promotional value to the artists, no one is denying that," said Sen. Patrick Leahy (D - Vt.) on the Senate floor yesterday. "But there is a property right in the sound recording, and those that create the content should be fairly compensated for their work."
An amendment added to the Senate bill yesterday by Sen. Al Franken (D - Minn.) sets alternative minimum royalty rates for stations earning as little as $50,000 per year. And another amendment attached by Sen. Dianne Feinstein (D - Calif.) -- so new that it hasn't yet appeared in the Library of Congress' transcript -- would establish, as Sen. Leahy's office puts it, "parity in the rate standard across platforms that publicly perform sound recordings." In other words, a mandate for equal rates between the fees broadcasters will pay, and what Internet radio streamers such as Pandora agreed to pay in a compromise last July.
That could mean a whole new ballgame for copyright holders as well. As it stands now, broadcasters use a relatively simple formula to pay copyright holders for the use of the composition, as opposed to the use of the recording. That fee is based on a total cap on receipts of $230 million per rights organization (PRO) per year, divided by the number of radio stations participating. But as broadcast law expert David Oxenford writes, that fee is set to expire at the end of this year, and the renegotiation will not be easy.
Making it easier -- at least on rights holders -- would be that congressional parity mandate. If in the sake of "fairness" broadcast radio is held to the same standard to which Internet streamers agreed, the formulas for both performance and recording royalties could become adjusted to reflect a percentage of each station's revenues. Currently, streamers have agreed to a complex system whose ballpark basis is that the sum of performance and recording royalties be capped at 25% of net revenues, from any and all enterprises associated with the music, including advertising.
Whether the US radio industry could sustain such an expense, if it balloons this high, is doubtful. Industry analysts estimated that the total revenues collected by the nation's 12,500 stations dipped below the $17 billion mark last year, and will decline by at least another 10% by the time this year is out. If those estimates hold out, performance rights organizations under new legislation could stand to split not $230 million, but as much as $3.8 billion.
With 251 out of 435 representatives opposed to such legislation, according to the National Association of Broadcasters, you would think that should end the issue. But legislation that doesn't stand a chance of succeeding by itself has ways of getting passed anyway, usually as riders to unrelated bills that have no chance of failing. Health care legislation is already a complex issue; with the President's desire to get such legislation passed before the holidays, it could find itself taking on a passenger.
Which would be convenient for PROs, whose current agreement with stations expires after December. Station owners have intimated that should such new rates go into effect, they may stop playing music altogether and switch to talk-radio formats. And that would be convenient for politicians needing new platforms for assailing other politicians.
I see one person who isn't getting my vote come re-election time. Rep. Lamar Smith (R - Tex.)
Our representatives and senators have completely forgotten about who they are supposed to represent "The people".
This is just more evidence to that effect.
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|Well if this passes and it seems it will, you will see some radio stations go out of business. I think if it were not for the radio stations the music performers would have no audience at all unless they put on a tour. The radio stations do them a tremendous service playing there music.
We do not need more talk radio and the Rush Limbaugh rubbish, there are too many rude shock jocks on the air now. I like Music and I hope those most radio stations can survive, but, that remains to be seen.
Simply put, it all comes down to money and if you see radion stations go down due to this new high fee, you will see CD's go allot lower in sales due to the fact, no one has heard it before and what people do not hear, they do not buy.
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|If we assume that the current approach is unfair, in that radio stations are playing music without paying for it, and we take the acknowledgment of the promotional value of radio as stated by Sen. Leahy above, then surely it would be no more fair for radio stations to be the only ones paying. Sure, maybe they should pay for playing music, but the music industry should also pay the radio stations to have their music played. Now which is easier: have the radio stations pay to play, and have the industry pay to play, resulting in the money crossing in the air and *maybe* one party coming out a bit ahead OR just ignoring the royalties for performance entirely since they are of a promotional nature? That, as I understood it, was the logic behind the original rules.
But maybe there's room for improvement here. Maybe, since it is of promotional value, the music industry really should directly pay for what it wants played. And if a radio station wants to play something *other* than that, they pay the royalties. Hm....
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|I'm glad I got out of radio when I did. :)
This is the music industry biting the hand that feeds it...again. I have no problem with the industry going after illegal downloads, etc...but this would make no sense. Not many stations would survive.
Between Internet radio, Satellite radio (yes, it is having an impact), and MP3 players, radio was already punch-drunk. Now raising the fees for music rights...that may push things over the edge. The big companies will buy up just about everything and homogenize formats and radio will effectively be on long-term life support.
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|coupling this with the "Fairness Doctrine" would be a win-win for the Democrats. More stations being forced over to talk-radio format...with the inclusion of forcing stations to provide equal airtime for Democratic and Republican talkshow hosts. That's one way to push their adgenda of fail and deficits
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|This will just open doors for more Rush Limbaughs to appear. Radio used to be the only format that the singers and recorders had to get their music out. They should be paying the radio royalties for actually making them money in selling their music.
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|If this gets passed it will make it even tougher for radio to survive. Already many don't listen to it anymore. I got so sick of radio, no matter what station, playing the same songs over and over. The station that plays new and interesting tracks is basically dead. Its only encouraged more people to either download illegally or simply use services like Pandora to get new music.
Music companies need to work with radio to try out new bands, broaden musical appeal rather than only play the hits which gets boring.
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|Radio? That's still used for music? Who knew? See you in oblivion, music radio...
"The radio is broken / it won't work anymore"
Frank Zappa
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|There aren't any radio stations in my area that play new music. We listen to the oldies. I wonder if the stations will get a discount for 50 year old music :).
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|"With the music industry's business model in flux, mostly due to forces seemingly beyond its control"
That's total bull.
"usually as riders to unrelated bills that have no chance of failing"
Ok any politician(s) that does such a thing is pretty slimy. Says a lot about their character and up bringing.
Basically I really don't know what's going to happen but I do have my opinion and here it is. I do think some slime balls will "ride" this bill and get it passed this way. I don't think all radio stations will go talk radio but I do think they will be seriously looking at alternatives, maybe indie or whatever. I also think that this bill could take the power/monopoly from the big labels since radios will not just play any crap sent to them but instead will begin to rate new music based on somesort of business model of what they think how their listeners will like the song, will they be listening to their station for it etc. basically how much money they think a song can net them. This will eliminate tons on current artists and new artists as they will have trouble finding a radio station to play their music. I don't know how well I'm explaining my idea here but hope you understand.
Now assuming my idea is even partially correct that will open up the doors to current bands etc. who are trying to "make it big" but can't get a record label to sign them. Because I believe radio broadcasters can and will create some means so that one could submit their song(s) to be rated. And I'm also willing to bet that if the band(s) are willing to let the radio stations play their song(s) for free they will get plenty of airtime, assuming the song(s) don't suck too much :)
That's just my 2 cents before taxes, and don't take my opinions too seriously as I'm insane :)
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|"Ok any politician(s) that does such a thing is pretty slimy. Says a lot about their character and up bringing."
TBH, it's expected, and sometimes the only way to get some things passed. Now, some of them put some questionable riders in, to be sure...and they should be publicly outed for such things, bbut not all riders are of that nature.
I believe the result will be similar to what you have explained, but I believe those artists will have more options open to them if this goes through. More stations will be playing more independent artists, which will open the floodgates for any artist who does not want to take the traditionally easier path of signing all their rights away to the label in order to get air-time.
This could actually backfire on the labels in such a way as to be incredibly beneficial to real artists with real talent.
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|I see the end of music on the radio. The music industry really wants to kill the goose that laid the golden egg. The record companies can't pay to get their music on the air and radio stations can't afford to pay for the crap the music industry is pushing. Where did these music execs get their education? They should sue their schools for their obvious failure to learn simple economics.
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|I really hope this legislation passes so the Music industry dies for once. They become what they are today for radios. Bunch of ungrateful people.
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