Record Labels Have Tried to Get a Radio Performance Royalty for Decades. Is Anything Different This Time?
Written by djfrosty on June 28, 2024
Another piece of legislation in Washington, D.C., is making its way through Congress that would pay artists and record labels for plays at terrestrial radio. If that sentence sounds familiar, that’s because the issue has long been present on Capitol Hill without managing to win a presidential signature.
In 1988, Frank Sinatra sent a letter to Paul McCartney, Stevie Wonder, Ella Fitzgerald, Bruce Springsteen and about 20 other music luminaries about a decades-old inconsistency in music copyright law. There’s no reason why the writer and publisher should be compensated for radio plays but not the performer, he argued. Sinatra foresaw an expeditious end to his activism. “We are optimistic that with a united effort, we will be able to achieve successful results within a reasonable period of time,” he wrote. But 36 years and numerous legislative attempts later, other artists are still working on the task.
The latest artist to pick up the baton is country icon Randy Travis, who appeared before a House Judiciary subcommittee hearing on Wednesday (June 26) in support of the latest legislation to address the issue, the American Music Fairness Act. Artists helped build radio in the U.S. and should be properly compensated, said Randy’s wife, Mary Travis (Randy has had difficulty speaking since suffering a stroke in 2013). Passing AMFA, she told lawmakers, “would make many old wrongs finally right.”
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The safest statement of the afternoon, though, went to Subcommittee chairman Rep. Darrell Issa, who admitted the hearing was “a repeat of some things we’ve seen in the past.” In recent memory, lawmakers have introduced the Performance Right Act in 2007 and 2009; the Free Market Royalty Act in 2013; Fair Play, Fair Pay in 2015 and 2017; the Ask Musicians for Music Act (AM-FM) in 2019; and now the AMFA in 2022 and 2023.
AMFA is like its predecessors in numerous ways: It provides accommodation for small broadcasters that reduce their royalty obligations. It protects the royalties paid to songwriters and music publishers for the performance of musical works on terrestrial radio. Most importantly, the bill codifies a performance right for sound recordings.
But is anything different about AMFA? “The language of the bill hasn’t changed since [the Performance Rights Act in 2009,” says Linda Bloss-Baum, associate director of American University’s business and entertainment program. “And I’d say kind of the appetite on both sides to have a meaningful negotiation hasn’t really changed either.”
The radio industry’s opposition to a new performance right certainly hasn’t changed. “A new performance royalty could spell the end for many local stations,” Curtis LeGeyt, president/CEO of the National Association of Broadcasters, said during Wednesday’s hearing. After surviving an advertising slowdown from the COVID-19 pandemic and facing the rise of streaming platforms, radio stations are arguably in worse financial shape than in years past. “Local broadcasters across this country are operating on extremely tight margins right now,” LeGeyt added.
The AMFA attempts to go easy on small broadcasters while holding regional and national conglomerates to a higher standard. Mike Huppe, president/CEO of SoundExchange, believes bill makes better accommodations for small broadcasters than its predecessors. Under the AMFA, stations that earn less than $1.5 million in annual revenue (and whose parent companies make less than $10 million in annual revenue) would pay $500 annually. Small, non-commercial stations with annual revenue of less than $100,000 would pay as little as $10 per year. “In that sense,” says Huppe, “this is the best bill for small broadcasters that there’s ever been.”
Unlike previous bills, the AMFA also includes language that says the Copyright Royalty Board, which would set royalty rates payable by stations, could take the promotional value of radio play, and the fact that stations currently pay sound recording royalties for streaming on their digital platforms, when setting rates. But that’s unnecessary, says David Oxenford, partner at Wilkinson Barker Knauer. “The section of the Copyright Act that deals with royalties that are payable to SoundExchange already has this part of the consideration” in determining how royalty rates are set, he says.
The main differences between the AMFA and its predecessors might not be found in the actual language of the bill. Market conditions have changed. At Wednesday’s hearing, lawmakers seemed more impatient and fed up than in years past.
In his closing remarks, Issa used his bully pulpit to warn broadcasters that Congressional intervention would be more painful than a negotiated deal with record labels. “I will tell you that at least this chair and the ranking member of the full committee, we stand ready to negotiate fairly small amounts to change a principle to get this behind us,” Issa said to LeGeyt. “And if you don’t take that, [then] quite frankly you have to live with the consequences.”
Issa’s tone suggests the climate in Washington, D.C., has changed. Huppe believes streaming and AI have made people more aware of the “inequities” facing creators. Issa is among the subcommittee members to have sponsored legislation to protect intellectual property from the threat of generative AI. Rep. Adam Schiff, another subcommittee member, was one of a trio of lawmakers to send a letter to the Registrar of the U.S. Copyright Office out of concern that Spotify’s decision to take a discounted mechanical royalty rate for its music-audiobook bundle was not in the spirit of the Music Modernization Act.
What’s more, radio could get a big boost from the AM Radio in Every Vehicle Act, which would mandate all automobiles manufactured in the U.S. to have AM radio. The bill would mandate technology that benefits radio broadcasters; FM stations, too, would presumably be included in in-dash stereos. Logically, at least, that could strengthen artists’ and labels’ argument.
“We’re not necessarily against the [AM Radio in Every Vehicle Act],” says Huppe, “but we would say, how can you possibly do that and not fix [the performance right] at the same time?”