Lopsided Case for Performers' Royalties Made by House Subcommittee

By Scott M. Fulton, III, BetaNews

July 31, 2007, 10:29 PM

It was not a room where a professional broadcaster would have found the slightest bit of comfort. At a meeting of the House Subcommittee on the Courts, the Internet, and Intellectual Property Tuesday morning, a jovial and outright jocular spirit of bipartisanship prevailed, where 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.

No less than Grammy award-winning folk artist Judy Collins literally sang "Amazing Grace" at one point, changing the words to include, "How sweet the free sound," as a parody of the long-standing exemption in US law for broadcasters having to pay performance royalties.

The great Sam "Soul Man" Moore of Sam & Dave told horrific stories of colleagues such as Billy Preston and Bo Diddley, forced to work into their 80s and 90s with amputated limbs and debilitative medical conditions - artists who would and perhaps should be healthy, retired multi-millionaires if only radio stations had the heart to pay them.

The whole affair could have become the groundswell for a down-home gospel revival were it not for the presence of one Charles A. Warfield, Jr. - the lone representative of the American radio broadcasting industry, the president and COO of New York-based radio station owner ICBC Broadcast Holding.

There he sat, literally -- not even figuratively -- being asked to account for eight decades of public policy that led to million-selling performers receiving unfair nursing home care. Even if you tend to side against the existing broadcast exemption, it was difficult not to feel some sympathy for the man who volunteered today to play the role of piñata.

Currently, terrestrial radio stations pay royalties that are collected by the recording industry and songwriters. But for eight decades, broadcasters maintained that playing music provided a service to performers that compelled listeners to buy music. That service benefits record labels, broadcasters have argued, which should then share some of its wealth with recording artists, besides their typical contractual arrangements.

From the look and feel of today's hearing, a novice to American politics might forget it was Congress who maintained that exemption for broadcasters since the 1920s.

"It's very important that we realize how unfair the system is to artists...under the current law," stated Rep. John Conyers (D - Mich.), who also chairs the parent House Judiciary Committee. "They're not compensated when their songs are played on broadcast radio...Satellite pays, Internet pays, broadcast still hasn't come around. There was a time when just being played on the radio would do it, that would make you. But those days - as everybody here knows - are not the same any more. We have so many different venues, and it's in this sense that songwriters who receive compensation regardless of which platform performs their songs. Artists are only paid when their songs are paid over the Internet, on satellite radio, or cable."

But Conyers did try to sound a warning, if gently: "I think we can work out some kind of compensation package without harming the songwriters. They've had to come through a long period of time for them to be compensated." He went on to say that increasing the fee for performance royalties could negatively impact what songwriters receive, implying that this impact could come by way of reduced airplay.

Rep. Darrell Issa (R - Calif.) spoke today as if the repeal of the exemption was already done. "In my seven years in Congress," Issa said, "this is the first time that, in a no ifs, ands, or buts way, it's been made clear that the status quo will no longer be acceptable...I think we all understand here today that broadcasters are on notice that we intend to look at a reorganization of this."

Joining the chorus, Rep. Steve Ira Cohen (D - Tenn.) noted that, as the technical ability of broadcasters to present high-definition music increases, the same clarity of signal listeners receive from satellite radio will soon emerge from ordinary radio. And digital recording devices will soon exist that are capable of preserving "a sound quality that...for most people's ears [will be] the equivalent of CDs.

"I also think that we in Congress have long ago lost our 'clean hands' on the concept that broadcasters are promoting," Cohen added. It's very clear that perhaps Judy Collins or Sam Moore, a few years ago, in the earlier part of their careers, might well have signed away for three, five, or ten years the rights to receive any royalties from their performance, in return for a guarantee that they would be promoted when their songs were not so...well regarded." Referring to an earlier-told story of the estate of Patsy Cline receiving zero royalties for "Crazy," Cohen said, "It is also clear that artists who are deceased, their estates today can't say, 'We're going to perform...go on the road.'

"It is very, very clear that we need to create a recognition that the performing artist has a right," he continued. "The broadcaster must show any offsets to that right."

While Rep. Zoe Lofgren (D - Calif.) sided with her colleagues in principle, she did sound the clearest note of caution about ensuring that whatever performing artists do receive must be determined fairly - using the Internet streaming radio royalties debate as a negative example.

"As we look at this issue of equity among the platforms," Lofgren stated, "I think we need to look at not just who gets paid, but how much. We know that, in the Internet radio environment right now...there are small Internet radio [providers] that are going to be charged 300% of their revenue. That's not going to work for them. They're niche stations, 'Beethoven-all-the-time.' At some point, as we look at making sure artists get paid as they should, we need to figure out how we add equity across all platforms in all ways."

Representing the point of view of copyright law on today's panel was Register of Copyrights Marybeth Peters, who perhaps for the first time singled out the broadcast industry as not only unfair to recording artists, but as a genuine threat to their livelihood.

"Certainly the record industry has been a very profitable industry, making its money in the United States from distribution of copy," Peters testified. "That, coupled with the political clout of broadcasters - a clout that they have always enjoyed - has led to today's situation. Today, however, the recording industry is hemorrhaging because of the reproduction and distribution rights, which can no longer generate the revenues to support the industry. In part, that's due to the epidemic of online piracy that we have yet to come to grips with, and that we'll never be able to control completely. In part, it's due to technological advances that have allowed people to get copies for free.

"So broadcasting is clearly a threat as well as a benefit," Peters continued. "In this new environment, we can no longer afford the anomalous treatment that has been accorded to sound recordings. As works that are primarily enjoyed by means of performance, they should be subject to public performance rights that provide, at a minimum, compensation from those who financially benefit."

While congresspeople argued that the changing landscape of music distribution has removed the conditions under which the broadcast exemption would make sense, singer Judy Collins went so far as to argue she should be owed back royalties from radio dating back to the 1970s.

"I believe that musicians and artists, as well as songwriters, should be rewarded and awarded and paid properly for their talent and artistry," testified Collins. "For the most part, artists are treated equally. There's one glaring exception in today's music marketplace where musicians, artists, and sound recording copyright owners are left behind: Terrestrial radio stations do not compensate artists for our performances when they play our music over the air." As an example, she told a story of how in 1975, she put Stephen Sondheim's "Send In the Clowns" on the charts - the only one of his songs, she said, to be officially noted as popular. Sondheim wrote Collins a letter, thanking her for "giving me my first hit song." Apparently he was paid for it.

Next: One lone broadcaster's rebuttal