RSSLopsided Case for Performers' Royalties Made by House Subcommittee
By Scott M. Fulton, III | Published July 31, 2007, 10:29 PM
(continued from previous page)
In the midst of this staggering setup, ICBC's Charles Warfield took the floor. He began swinging away by characterizing a new set of royalties for terrestrial radio stations, including those he owns, as a "performance tax," borrowing a term coined by the National Association of Broadcasters.
"We oppose a performance tax because compensation to the record labels and artists is provided under the current system," stated Warfield, "and the effort to upset the careful balance envisioned by Congress and beneficial to all parties for the last 80 years, is misguided. The existing model works for one very significant reason: The promotional value that the record labels and artists receive from free airplay on local radio stations drives consumers to purchase music." He cited a survey where 85% of listeners polled identified FM radio as the medium where they first heard music they later purchased.
"Local radio is, without question, the engine that drives music sales," Warfield continued. "Any suggestion that radio play does not boost sales, or actually diminishes sales, runs counter to simple common sense. While it is true that the recording industry has seen its profits dip in this new digital world, in no way can that decline be attributed to radio. Just the opposite: Local radio is free advertising for record labels and artists, and provides the best and most direct way to reach consumers.
"What I have failed to understand after 30 years in the industry," he went on, "is why the recording industry is willing to essentially bite the hand that feeds it. The free airplay for free promotion concept has established a natural, symbiotic relationship between local radio and the recording industry. Both grow and flourish together. A performance tax, however, will financially hamstring broadcasters. The effect of such a dramatic increase in radio station costs will not go unnoticed."
In other words, those costs will have to be compensated with either more advertisements or reduced public affairs features such as news and traffic - or both.
Many of today's questions were directed at Warfield. Rep. Bob Goodlatte (R - Va.) asked how new digital media were undermining the promotional capabilities of terrestrial radio. Warfield wouldn't accept the premise:
"When we're looking at these challenges, unfortunately, the record industry has not kept up with these changing times." He took issue with those who were "coming here as part of a coalition seeking taxes from local broadcasters to subsidize their challenged business model. There's no question that the industry is challenged today in selling music with these new alternatives that are out here. But in no way would we indicate that there's any evidence that the work that local broadcasters do, and the free promotion that we provide, is responsible for [that]."
Rep. Goodlatte countered by suggesting that other platforms that do pay performance royalties would also contend they too are partly responsible for promoting artists. As a result, some promoters are paying royalties and others aren't - a disparity he believes needs to be addressed.
To everyone's surprise, Collins -- whose songs through the decades evoke images of peace, harmony, and brotherhood -- suggested that she was considering a way to address that disparity:
"I'm sitting here wondering about class-action suits," she said. "Excluding the issue of whether or not we should be paid as artists in this country -- and I think I have settled that in my own mind -- the fact that my records across the world have not been paid for, means that many thousands -- millions, perhaps -- of artists over a period of 80 years, and all of these musicians who are not being paid in countries which have laws which protect the artist...Where is that money? It's not in my pocket."
In a later exchange with Rep. Hank Johnson (D - Ga.), Warfield made the bold attempt to shift the blame for artists' unfair treatment from terrestrial radio to the recording industry.
"I would put that back as a responsibility of the record labels: Why are the record labels allowing that to happen with artists that have helped make them as successful as they are today, and [why is it] the responsibility of the broadcasters to cover, in some cases, the misdeeds of the record labels?"
This began a surprisingly fumbling exchange between Rep. Johnson and Warfield, which began by Johnson suggesting that radio stations receive a cut of record sales...as a matter of everyday business. Warfield explained that the revenues are generated by the recording labels from the consumers, and suggested that revenue could be shared with artists as well as songwriters.
Johnson then said he meant that the existence of recorded music makes it possible for radio to deploy its advertisements, which he then suggested led to "revenues that are derived from the exploitation" of sound recordings. Warfield responded that it perhaps shouldn't be called "exploitation," and that some radio stations don't exactly fare well with that business model.
"The imposition of this additional tax on many of these broadcasters in small and medium markets, could be the difference between whether they remain in business or not, whether they continue to service the communities that they are licensed to serve," remarked Warfield.
Radio stations -- especially the smaller ones in rural areas -- don't have the means to generate additional sources of revenue, he said. Johnson cited Clear Channel Communications' quarterly report which showed a revenue gain over the previous quarter, suggesting that those gains were commonplace.
But this is where Johnson made an odd suggestion: that radio stations already do generate additional revenue through the licensing of its signal for rebroadcast by those Internet streamers you read so much about.
"Part of that money comes from Web broadcasters who pay royalties to the terrestrial broadcasters for running their transmissions over the Web, isn't that correct?" Johnson asked.
Johnson may have at first thought the resulting silence was one of those stirring Congressional moments, like Howard Baker asking what the president knew and when did he know it. It was actually the sound of Warfield trying to find a way to graciously respond. He began by trying to change the subject:
"I would respectfully indicate that...the broadcast industry has grown from $15 billion to a $20 billion industry from 1998 to 2006, but what I would indicate is that all of that growth occurred between 1998 and 2000, and [since then] there has been absolutely no growth in our industry."
"My question is this," Johnson tried once again. "Webcasters pay a fee to broadcast terrestrial radio over the Web, correct?"
It was unavoidable now. The question was firmly on the record. "In some cases, that may be true," Warfield tried, politely. But Johnson dug his hole deeper: "No respectable broadcast radio transmitter would allow their signal to be broadcast over the Web without getting paid for it."
Warfield then tried a different tack, explaining his stations stream to the Web using their own resources. Johnson wouldn't let it go: "If anybody wanted to broadcast your programming over the Web, you would want them to pay you for that."
There was no other out now for Warfield but to put his foot down and squash. "If you know anyone who would like to do that," he said, "I'd love to speak with him. I've not had that opportunity."
At last sensing the depth of the hole he'd dug for himself, Johnson tried to emerge by once again saying he meant something else. "There are a lot of folks out there who are broadcasting over the Web and paying money for it. If you look at that in terms of that Web broadcasting like a sound recording, it's paying the performer, in other words, to broadcast. So I don't see why terrestrial broadcasters should be exempt from having to pay..." Chairman Howard Berman (D - Calif.) put Johnson out of his misery by announcing that time had expired.
The discovery that at least one congressperson believed Internet radio streams consisted of terrestrial radio streams that were sublicensed to them, and that few others appeared eager or capable of correcting him, could be the first indication that Congress' stance to date on the issue of Internet streamers' royalties is at least the partial product of a deep confusion.
Were it not for Warfield's presence on today's panel, the fact that at least a portion of Congress remains confused about the basic business model of broadcasting, might have been drowned out by a heart-wrenching rendition of "Send In the Clowns."
How about we look at paying for these songs once. If you're terrestrial, satellite, internet, whatever. Small stations buy their CDs, big stations have them given... ok, so they all pay $1000/year to run, per station. Or better, it's $10,000 if you have more than 10,000 concurrent listeners, $1 if you don't. Then internet stations can cap their listener totals, and you can wait to get a stream if it's busy.
Thanks, and Congress, you can just send me a check for solving your problems. I want ten toilets and four hammers, paid in cash.
Score: 0
|I want ten toilets and four hammers, paid in cash.
*laughs*
Score: 0
|The problem with this whole scenario is the fact that the symbiosis between the record labels and the broadcasters makes things especially difficult, if not economically impossible to change.
With the current push for copyright holders to squeeze every single avenue they can in order to bring in revenue to sustain an archaic business model, while simultaneously using that failing business model as an *excuse* to point the finger at "internet file sharing" as the cause, they're in a position to reap the most benefit out of the deal.
What incentive would broadcasters have to play music if they have to PAY to do so, when the advertising dollars that they do get already probably wouldn't cover the licensing fees back to the labels for playing the music? You'd see stations dropping like flies or nothing but "out of copyright public domain oldies from the 20's and 30's" stations.
If the broadcasters are stuck with royalties, the record companies basically get PAID for someone else to hawk their product FOR them, advertising the same old corporate constructed crap music that's been coming out since the late 80's.
So, the current system, as it stands, is probably the best solution. Both sides will have to agree that the leech that is the record industry clinging to the neck of the broadcasters and artists is going to have to look elsewhere for opportunities to grow and change their business model in order to accomodate a changing society who isn't content with being hamstrung by archaic distribution methods.
That being said, the royalties for internet broadcasters and XM/Sirius should be lessened also, because IMHO the medium by which the broadcast is done is irrelevant. Why should the terrestrial broadcasters recieve a break on royalties that the others don't get simply because their broadcast medium is wireless FM/AM? They're still doing the exact same thing, are they not? They're promoting products for the record companies.
I think that if the Terrestrial broadcasters were charged royalties just like everyone else, a new market dynamic would emerge from this:
All of a sudden you'll find radio stations sending notices to all of the record companies stating that unless there is an exclusive agreement waiving the fees, they will simply not play artists from their particular labels. You'll start seeing one rock station playing AC/DC while another won't touch them because of the particular label they belong to. This will do nothing but alienate the listening public.
Score: 0
|Why is it up to the radio stations to negotiate and pay another fee to play music? I would think that would be negotiated when they pay for the rights to play the songs period.
If the performers are not getting paid for the songs they produce it should be up to them to renegotiate the contracts.
Since when is it Congresses job to ensure someone gets paid for something?
Score: 0
|THIS IS JUST MORE PROPAGANDA FROM THE MUSIC INDUSTRY.........
It will open the door to more Bureaucracy. We will now have music police in coffe shops making sure they are payng the proper fee to the music industry for 25 people listining to music.....
ahhhh its allready happining so who cares .....
Score: 0
|both Democrats and Republicans spoke at length of what they characterized as the historically unfair treatment of performance artists by broadcasters who refused to pay for the privilege of playing their works over the radio.
Let's see how well the artists do when the radio stations simply stop playing their crap. Today's popular artists *exist* because of radio.
I'd love to see how quickly they'd be begging for airtime. Bring back widespread "payola". Make *them* pay to be played. See how they like the tables turned. This is a dangerous game they are playing, and I do not believe the terrestrial stations are going to have any of it.
Score: 0
|I agree with you. However, I don't think terr. radio has a good hand to play in this round. The problem is that they need listeners to solicit advertisers for revenue. If they play this game, it could be a while before they had any funds to pay their staff and stay on the air. They need to increase listeners, not lose them. The other side knows that and is playing it to their favor. I would love to see the radio stations opt to play unsigned/unknown artists and give RIAA the finger. Couldn't be much worse content than the heavy rotation shlock we're stuck with already.
Score: 0
|The stupidity is just mind-numbing! Record companies have been screwing artists for decades and still the idiots don't get it. Forget how dumb Congress is, we all knew that; it's the artists and songwriters who are showing just what suckers they are. Instead of Judy Collins, Congress should talk to some of the many artists who have been conned and ripped off by the recording industry.
Score: 0
|Can not wait till all these kids that have been sued become politicans and throw that back in the MPAA RIAA faces.
You said all 50 million of us were criminals, now we run the country. Lets see how long that game lasts. The only reason they get away with treating voters like this is cause they pay a ton of money to make sure no one in government cares. Eventually those old Idiots will either die out or be voted out (lets hope soon) Then The RIAA will learn what it feels like to be terrorized and intimidated into submission.
Score: 0
|OK, so artists are blaming radio stations for things like unfair nursing home care? What a bunch of idiots. This isn't the fault of the radio stations. It's the fault of the record companies. There is absolutely no reason whatsoever that radio stations should have to pay more money to anyone.
Score: 0
|Record Companies? You have no understanding of copyright law obviously. Let's say you invent something and want to sell it. By your reasoning I can steal your idea and make a million bucks and that's ok is it? Radio stations make money from advertising because for some reason people want to listen to their broadcasts. These are not charitable organizations, they generate large amounts of revenue by playing musical content that people want to hear. I guess someone who writes a song that gets played on the aforementioned radio station doesn't deserve any renumeration at all. All these complaining people stuck in the muso's nursing home should just shut up and be glad that they got some unpaid airplay, after all it's great publicity. Maybe one day they can stage a comeback in their wheelchairs and walkers.
Score: 0
|I guess someone who writes a song that gets played on the aforementioned radio station doesn't deserve any renumeration at all.
It's called "buying the CD" or "buying the online track". It wasn't all that long ago that labels would pay radio stations large sums of money to get a certain artist or track airtime. Why? Because without it, there is no artist. There is no track. The radio stations promote them. The radio stations get us out there buying this crap.
Forcing the radio stations to play only unsigned, non-affiliated bands, would kill off the Big Media labels and RIAA faster than any of us could dream possible.
Hey, on that thought, maybe this whole thing is a *good* idea.
Score: 0
|It's not about "buying the CD or the track", that's a given. What this is about is "performance royalties". Do you realize that every time somebody uses a copyrighted piece of music they are obligated to pay the artist a fee for the use of that music? If you write an original music track, you are entitled to collect royalties for the airplay of said track for at least 70 years after you wrote it, if you live that long. Elevators, supermarkets, on hold music, and of course radio airplay, it's all subject to copyright fees, like or not. The only way to change that is to deny people the ability to collect copyright monies for their work. Is that what you want? Yes we all know about payola, but that's not the issue.
Score: 0
|I'm all for the musicians making money, and I understand the concept of copyright and royalties, trust me.
The main issue here revolves around the fact that this is a public medium that was originally created by the Music Industry to get their music out there so people would buy. It still exists for the most part, for that same purpose.
Had there been a major change in format, or some relevant loss in sales and other royalties due to this medium, the discussion, IMO, would then be valid.
As I said above, they can do this, and that's their prerogative, but I firmly believe that if they do, it will be the end of the Music Industry as we know it. The radio stations will not kowtow to this and will change their formats accordingly.
Score: 0
|They already have. Talk radio anyone? The music industry can go hell as far as I'm concerned. I'm no fan of their monopolistic practises, and while we're at it, "sir" Elton John can take a hike as well.
Someone should shut him down.
Score: 0
|While talk radio exists, this isn't the market they are after. Such fringe stations have always existed. It's irrelevant to the discussion.
As for Sir Elton John, and Music Industry, and a certain warm locale, it can all be fixed. No need to start sending these folks to LA (aka Hell), they seem to like it there anyway.
All we need is a few simple (which pretty much means impossible) changes to our copyright laws. No extensions, no transfer, and a system of community license which will stop market tampering and ensure a fair market for both consumers and producers.
Score: 0
|It's really, really hard to believe that anyone is for such a double-standard. This will end up a compromise of terrestrial radio paying less than all other forms of radio -- even though they have the largest audience.
And frankly, did anyone actually believe that Congressmen would actually understand these things? They have no interest in how things work. Their job is very simple; get re-elected. Why stay up on technology? It's just the committee that gets all the toys from the lobbyists - no need to work. Duh.
Score: 0
|You're right — politicians only know what lobbyists tell them, assuming the info comes with large and frequent campaign donations. It's stunning. Most every amerikan politician is a millionaire and it stunning to see how disconnected they are to everyday life.
Score: 0
|what's more interesting, and leads me to believe they know full well what they are doing, is the fact that most of these politicians were around during the "payola" scandals where the labels paid the radio stations to give certain artists and tracks more airtime (yes, I'm pretty sure it's still going on, just not as publicly).
It all happened because, at that time, they *knew* what made their products popular. They *knew* airtime=sales. I highly doubt all of them have forgotten this...
The more I look at this, the more I see the RIAA and Big Music digging it's own grave. They've had *way* too much control in our govt' for way too long.
I know it's early and I haven't quite finished my coffee yet, but it's possible the representatives know this and see this as a way to finally get that rather large and obnoxious monkey off their backs, and at the monkey's request, even.
Score: 0
|Interesting thought, although it assumes a level of intelligence on the part of Congress that is a little hard to imagine.
I agree there seems to have been some harkening back to bygone times, but I got the impression that most of those in attendance were just reliving past fantasies of bedding Judy Collins.
Score: 0
|