State Champ Radio legislation
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In the latest bid by lawmakers to crack down on TikTok in the United States, on Tuesday (Mar. 7) a bipartisan group of senators introduced a new bill that would empower the White House to rein in the Chinese-owned video-sharing app.
Led by Sens. Mark A. Warner (D-Va.) and John Thune (R-S.D.) and co-sponsored by 10 others in the chamber, the RESTRICT Act would “comprehensively address the ongoing threat posed by technology from foreign adversaries” including China, Russia and Iran by authorizing the Department of Commerce — led by Commerce Secretary Gina Raimondo — “to review, prevent, and mitigate information communications and technology transactions” that are found to threaten U.S. national security, up to and including an outright ban, according to a press release.
The White House has also come out in support of the new bill, with U.S. national security advisor Jake Sullivan noting in a press release that the legislation “presents a systematic framework for addressing technology-based threats to the security and safety of Americans.”
Though TikTok is not named in the text of the RESTRICT Act, both Warner and Thune invoked the platform in their own statements on the legislation.
“Congress needs to stop taking a piecemeal approach when it comes to technology from adversarial nations that pose national security risks,” said Thune. “Our country needs a process in place to address these risks, which is why I’m pleased to work with Senator Warner to establish a holistic, methodical approach to address the threats posed by technology platforms — like TikTok — from foreign adversaries.”
A representative for TikTok did not immediately respond to Billboard‘s request for comment.
TikTok has been subject to increased scrutiny by the U.S. government recently over fears that national security and consumer privacy could be compromised by the platform, which is owned by Chinese company ByteDance. In December, President Joe Biden signed a bill that prohibits the use of the platform by nearly 4 million government employees on devices owned by its agencies, joining at least 27 state governments and several universities that have passed similar measures. And last month, the administration drew a sharp rebuke from the Chinese government after it gave all federal agencies just 30 days to wipe TikTok from government devices.
Tuesday’s Senate bill follows a separate one introduced in December by Sen. Marco Rubio (R-Fla.), Rep. Mike Gallagher (R-Wis.) and Rep. Raja Krishnamoorthi (D-Ill.) that would have required President Biden to use the International Emergency Economic Powers Act (IEEPA) to restrict U.S. citizens’ access to the app.
In the House on Wednesday (Mar. 1), another bill advanced out of committee that would direct the Treasury Secretary to prohibit Americans from engaging with TikTok and other entities found to be directed or influenced by the Chinese government — though it was criticized by Democrats who said it had not been properly vetted and could affect innocent U.S. businesses. That legislation would additionally empower the President to impose sanctions on TikTok and other companies tied to China.
TikTok has long attempted to assuage fears that the platform, owned by Chinese company ByteDance, has ties to the ruling Chinese Communist party and censors content critical of the Chinese government and other authoritarian regimes. In June, the company announced it had started routing U.S. user data to Oracle cloud servers located in the U.S., instituted audits of its algorithms and established a new department to solely manage U.S. user data for the platform.
The U.S. government has so far been undeterred. “We look forward to continue working with both Democrats and Republicans on this bill, and urge Congress to act quickly to send it to the President’s desk,” said Sullivan on Tuesday.
Concerns about TikTok have also been prevalent in other corners of the West, most prominently in Europe. In January, TikTok CEO Shou Zi Chew met with European Union officials over concerns about child safety and data privacy, among other matters. On Feb. 16, TikTok’s general manager of operations in Europe, Rich Waterworth, attempted to allay some of those concerns in a blog post where he noted that the company plans to establish two additional European data centers, citing a commitment “to keeping our European community and their data safe and secure.” He added that the company is “continuing to deliver against” a data governance strategy they set out for Europe last year, which includes plans to further reduce employee access to European data, minimize data flows outside Europe and store European user data locally.
Zi Chew is slated to appear before the House Committee on Energy and Commerce on March 23, when he’s expected to comment on TikTok’s data security and user privacy policies, the app’s impact on children and ties with the Chinese Communist Party.
President Biden urged Congress to “crack down on excessive online concert, sporting event, and other entertainment ticket fees” on Wednesday (Feb. 1), according to a statement from the White House. Biden’s call for action came roughly a week after Live Nation Entertainment faced scathing critiques from both Democratic and Republic senators during a Senate Judiciary hearing.
Speaking with his competition council, Biden said that Congress “should lower the huge service fees that companies like Ticketmaster slap onto tickets for concerts or sporting events that can easily add hundreds of bucks to a family’s night out,” according to The New York Times. “It’s a basic question of fairness,” he added.
President Biden’s interest in curbing ticket fees is part of the Junk Fee Prevention Act, which he discussed with his competition council Wednesday. The act takes aim at four types of excessive fees that cumulatively “cost American consumers billions of dollars a year.”
“Many online ticket sellers impose massive service fees at check-out that are not disclosed when consumers are choosing their tickets,” the White House noted in a statement. These fees make attending live events prohibitively expensive in some cases: “A family of four attending a show could end up paying far more than $100 in fees above and beyond the cost of the tickets.”
As a result, “the President is calling on Congress to prohibit excessive fees, require the fees to be disclosed in the ticket price, and mandate disclosure of any ticket holdbacks that diminish available supply.”
In addition to limiting ticket fees, the Junk Fee Prevention Act also aims to eliminate “airline fees for family members to sit with young children,” “exorbitant early termination fees for TV, phone, and internet service” and “surprise resort and destination fees.”
Ticket fees were just one of several topics that came up during the Senate Judiciary hearing last month, which also explored the Taylor Swift ticket sale fiasco, whether Live Nation bullies its competitors and the extent to which the company acts as a monopoly. Joe Berchtold, Live Nation’s president and chief financial officer, told lawmakers that his company wasn’t as powerful as critics were making out and argued that “ticketing has never been more competitive.”
The hearing almost immediately caused ripples in the live music industry. The following day, Ineffable Music Group announced that it would no longer collect 20% of touring artists’ merchandise sales at the 10 venues it owns or operates. “Any action we can take to help to insure a healthy, vibrant concert ecosystem is important,” Ineffable Music Group CEO Thomas Cussins told Billboard at the time.
The American Music Fairness Act (AMFA), which would require AM/FM stations to pay performance royalties to music creators and copyright holders for radio airplay in the U.S., just cleared a key hurdle in Congress — though the bill is unlikely to pass before the new session of Congress convenes in January.
In a mark-up session on Wednesday (Dec. 7), the House Judiciary Committee (which deals with copyright matters) voted to advance the bill, clearing its way for a full vote on the House floor. To become law, the bill would need to be approved by the full House of Representatives as well as the Senate and then signed into law by President Biden. However, the proposed legislation is unlikely to pass in the current session of Congress, which is drawing to a close at the end of the month, unless it’s tacked onto a must-pass bill during the lame duck period.
In an opening statement prior to the vote, Judiciary Committee ranking member Jim Jordan (R-Ohio) noted that bipartisan negotiations over the AMFA in recent months “stalled and never reached a resolution,” though he expressed confidence the bill could make it through the next Congress.
“While today’s debate is an important start in this conversation, if the American music Fairness Act has not become law this Congress, negotiations must resume next year,” Jordan said. “We believe there’s a deal to be struck here that is fair to all sides most importantly, fair to taxpayers and consumers.”
The AMFA is just the latest attempt by members of Congress to compel radio stations to pay performance royalties, which is a common practice in other countries but has not historically been required in the U.S. In Nov. 2019, Sen. Marsha Blackburn (R-TN) and Rep. Jerrold Nadler (D-NY) introduced a similar bill, the Ask Musicians for Music Act, which would have allowed artists and copyright owners to negotiate performance royalty rates with radio stations in exchange for permission to play their music. That piece of legislation followed a previous bill, the Fair Play Fair Pay Act — also introduced by Blackburn and Nadler — that set out to achieve the same goal.
The AMFA was introduced in the House by Reps. Ted Deutch (D-FL) and Darrell Issa (R-CA) in June 2021, with the legislation announced during a press conference attended by singers Dionne Warwick and Sam Moore and Dropkick Murphys singer/bassist Ken Casey. A companion bill was introduced in the Senate by Sens. Alex Padilla (D-CA) and Marsha Blackburn (R-TN) this past September.
Unlike satellite/online radio and streaming services, AM/FM stations pay only songwriter royalties on the music they broadcast. To rectify that, the AMFA legislation would establish fair market value for radio performance royalties in the same way it has been for those other platforms.
The bill was a response to the Local Radio Freedom Act, a non-binding resolution introduced in May 2021 by Rep. Steve Womack (R-AR) and Rep. Kathy Castor (D-FL) that opposes the imposition of a performance royalty, which proponents argue would be financially devastating for broadcasters. A companion resolution was introduced in the Senate by Martin Heinrich (D-NM) and John Barrasso (R-WY). Both resolutions are backed by the National Association of Broadcasters (NAB), which has long been opposed to enforcing a performance royalty payout on terrestrial radio.
In a statement on Wednesday’s vote, Recording Academy CEO Harvey Mason jr. called it “an important step,” adding, “I am grateful to Chairman Nadler, Rep. Issa, and members of the committee for supporting the music community’s right to fair pay. It is vital to the health of our industry that creators are compensated for the use of their intellectual property on terrestrial radio, and the Recording Academy will continue to advocate for AMFA until this bill is signed into law.”
The Recording Academy is a key supporter of the AMFA along with organizations including the AFL-CIO, the American Association of Independent Music (A2IM), the American Federation of Musicians, the Recording Industry Association of America (RIAA), SAG-AFTRA, SoundExchange and the musicFIRST Coalition. Over the past several weeks, more than 100 artists including Warwick, Common, Harry Belafonte, Jack White, Becky G, Cyndi Lauper and Gloria Estefan have signed their names to a letter urging lawmakers to support the bill.
“To be clear, this fight is far from over,” said musicFIRST chairman and former Democratic congressman Joe Crowley in a statement. “We still have further to go before this important bill can be passed into law and improve the lives of artists across this country, and we know that Big Radio corporations will continue to oppose us every step of the way.”
In his own statement celebrating Wednesday’s vote, SoundExchange president and CEO Michael Huppe called on the full House to pass the bill. “Tens of thousands of music creators – our family, friends, and neighbors – are counting on Congress to do the right thing and help them get paid for their work. We cannot let them down,” he said.
On the other side of the issue, NAB CEO and president Curtis LeGeyt thanked the committee members who voted against advancing the AMFA, along with members of Congress who have supported the Local Radio Freedom Act resolution that stands in opposition to the bill.
“These lawmakers understand that AMFA will harm local broadcasters and audiences around the country, undermine our ability to serve their communities and ultimately fail artists by leading to less music airplay,” said LeGeyt. “Broadcasters urge the recording industry to join us in serious discussions instead of using the few legislative days left in the calendar to pursue divisive legislation that faces broad congressional opposition.”
Advocates representing a wide cross-section of the music industry are again urging Congress to pass the Help Independent Tracks Succeed (HITS) Act, the long-simmering legislation that would provide an extra tax break to musicians, technicians and producers for recording sessions.
“Prior to the conclusion of the 117th Congress, the American music community calls on you to support American music creation that is still reeling from the pandemic by passing into law the bipartisan and bicameral Help Independent Tracks Succeed (HITS) Act,” reads a Nov. 15 letter sent to Congressional leadership, co-signed by 23 groups across the business.
The Recording Academy, which made the bill a major focus of its Grammys on the Hill event in April as well as its annual District Advocate Day in October, continues to lead the charge. During the latter event, held on Oct. 6, approximately 2,000 Academy members participated in lobbying for the HITS Act and other music industry priorities at nearly 200 U.S. congressional offices in Washington, D.C.
“Our hope is that we can get it done here before the 117th comes to a close because we have a lot of bipartisan support, bicameral support [in the] House and Senate,” says Recording Academy CEO Harvey Mason jr. “I really feel like this is something we should be able to get done and we’re hoping we can get done in the next few weeks.”
The HITS Act would allow musicians, technicians and producers to deduct 100% of recording expenses up to $150,000 on their taxes in the year they’re incurred. That’s a change from the current law, which requires music creators to amortize those expenses over the economic life of a sound recording, a period that usually ranges between three and four years.
The bipartisan bill was first introduced in the House on July 31, 2020 (followed by a companion bill in the Senate on Dec. 3, 2020), though it failed to pass as part of the two pandemic relief packages or as part of the $3.5 billion budget reconciliation package known as Build Back Better, which was ultimately halved and renamed the Inflation Reduction Act of 2022 before being signed into law in August. Now, with only a month to go before the changeover to a new, split Congress — Democrats will retain control of the Senate while Republicans will control the House of Representatives — advocates are hoping the bill can finally, successfully make it through the gauntlet as part of a must pass bill during the last few weeks of the year.
“[During] the lame duck period with these must pass bills, if there’s any kind of tax language in there or any kind of economic language in there that ties in with this, we’re really hopeful it will get in this time around,” says Richard James Burgess, president and CEO of the American Association of Independent Music (A2IM), which has long served as a key advocate for the legislation.
In the entertainment realm, music production is an outlier in terms of taxation; film, TV and live theater productions already enjoy a 100% first-year deduction. The HITS Act would simply apply the same standard to music, Burgess says, while also encouraging future music creation: “I think if anybody needs it, it’s musicians that need it really badly. It affects independent musicians and independent artists and independent labels probably more than anybody else because they have less bandwidth financially. The idea of getting $150,000 per project [that can be] written off against your taxes in the year that you incurred it, could really make a difference between being able to make another record next year or not.”
Burgess adds that the bill won’t just affect musicians and producers but trickle down to other parts of the industry and the greater economy. “Every artist that makes a record, that has a knock on effect to many, many other musicians and ancillary workers in the music industry,” he says. “Getting these kinds of tax benefits will make a difference across the board.”
While Burgess and Mason jr. were both relatively confident HITS could make it through the next Congress given the bill’s bipartisan support, they’ve clearly grown impatient on behalf of creators, many of whom lost income during the early stages of the pandemic. After more than two years of disappointment, Mason jr. puts it in stark terms: “Yes, it could get passed next year, but…I don’t think we should continue to have it laid off and cut out of bills. This is something that’s important for us coming out of COVID. We’ve seen this community suffer enough.”
You can read the full Nov. 15 letter below.
Dear Speaker Pelosi, Leader Schumer, Leader McCarthy, and Leader McConnell: The 117th Congress has witnessed significant bipartisan and bicameral accomplishments that have benefitted American workers, families, and consumers, and levelled the playing field so some important domestic industries can grow. Prior to the conclusion of the 117th Congress, the American music community calls on you to support American music creation that is still reeling from the pandemic by passing into law the bipartisan and bicameral Help Independent Tracks Succeed (HITS) Act (H.R. 1945/ S. 752).
The HITS Act is a low-cost and commonsense modification to existing U.S. tax law that will incentivize the production of new sound recordings by allowing qualified productions to deduct 100% of their costs upfront. With an annual deduction limit of $150,000, the bill is designed and tailored to specifically incentivize independent creators and labels to produce new music, sparking important creative investments in countless music small businesses across the country. This targeted approach makes the HITS Act a fiscally responsible investment in the American creative economy.
The HITS Act also brings much-needed parity to the tax code for all creative industries. Currently, under Sec. 181 of the Internal Revenue Code, qualified film, television, and live theatrical productions may elect to fully deduct new production costs in the year they are incurred. Music production, which occurs in every state and congressional district, deserves the same treatment. Instead of being able to fully deduct production expenses in the year they occur, independent recording artists must currently amortize production expenses for tax purposes over the full economic life of a sound recording. For small creators, this timing difference slows down their reinvestment in new projects that can fuel growth. The HITS Act harmonizes the tax code and ensures that all the major creative industries are treated similarly.
As you consider end-of-year legislation, the music community strongly urges you to pass the HITS Act. It represents exactly the type of bipartisan, bicameral, and non-controversial economic investment that Congress should be proud to support. Passage of H.R. 1945/S. 752 is a smart and simple step that will make a lasting difference for countless independent music creators and music small businesses.
On behalf of the hundreds of thousands of music makers and music businesses across the country, thank you for your consideration.
Signed,
American Association of Independent Music
Artists Rights Alliance
ASCAP
Black Music Action Coalition
Broadcast Music Inc.
Christian Music Trade Association
Digital Media Association
Future of Music
Global Music Rights
Gospel Music Association
Music Artists Coalition
Nashville Songwriters Association International
National Independent Talent Organization
National Independent Venue Association
National Music Publishers Association
Recording Academy
Recording Industry Association of America
SAG-AFTRA
SESAC
The Society of Composers and Lyricists
Songwriters Guild of America
Songwriters of North America
SoundExchange
CC Chairman Ron Wyden, Senate Finance Committee
Ranking Member Mike Crapo, Senate Finance Committee
Chairman Richard Neal, House Ways and Means Committee
Ranking Member Kevin Brady, House Ways and Means Committee
For evidence that California’s Prop 28 — which seeks to provide nearly $1 billion in new funding annually for arts and music education in all K-12 public schools — has become a pet cause among music luminaries, one need look no further than the industry’s most famous structure. The Capitol Tower in Hollywood, whose cylindrical shape has long drawn comparisons to a stack of records, currently has a “Yes on 28” flag flying prominently from its roof.
Universal Music Group, which owns the famed building and has given $25,000 to support the measure, isn’t the only high-profile supporter of Prop 28, which voters will weigh in on Nov. 8. Authored by former Los Angeles Unified School District superintendent Austin Beutner, the proposition has been endorsed by more than 350 individuals and organizations, including companies like Fender Music and CAA; legendary executives such as Quincy Jones and Irving Azoff; and A-list artists like Dr. Dre, will.i.am, Lil Baby and Katy Perry. In mid-October, Christina Aguilera and her fiancé Matthew Rutler (investor and founding executive of MasterClass) hosted an event at their home in support of the proposition that featured performances by musicians Lady Bri, One Republic’s Tim Myers and Aloe Blacc.
So why has the music industry, which Prop 28 does not directly support, come out to endorse it so heavily? As advocates put it, the money invested in students now will benefit the music business down the road.
“The most important beneficiaries are the kids themselves,” says Andy Mooney, CEO of Fender Music, which provided $100,000 in seed money for the proposition and donated another $1 million to collect signatures and market the proposition. But, he adds, “the benefit for companies like ourselves, or anybody who’s in the music and arts business in California, is the long-term investment that may yield dividends beyond my tenure.”
Currently, according to proposition authors, “barely one in five public schools has a full time arts or music teacher” and “arts and music programs have often been the first to get cut” at California public schools – a problem Prop 28 is designed to fix. The money allocated by the measure – which must be spent on arts and music education such as teachers, supplies, arts partnerships, training and materials – would include accountability and require schools to publish annual reports on how they spend funds, including specific programs and how students benefited.
Important in garnering support from voters is the fact that Prop 28 “is not taking any money away from existing school funding,” says Beutner, who retired as superintendent last year and has spent his newfound free time focusing on the measure. The money provided by Prop 28 would be 1% of the California school funding budget, which is currently 40% of the state’s general fund. But instead of siphoning that 1% from other school needs, it increases the school budget from 40% to 40.4% of the state’s general fund. Based on the current year, that would amount to $950 million – 1% of the state’s $95 billion school budget.
Also important to many supporters is the fact that Prop 28 offers a route to diversify the creative sector. While all 6 million public school students in California would have access to the new funding proposed by the measure – which will come from the state’s general fund without raising taxes – 30% would go to schools based on their share of low-income students enrolled statewide (with the remaining 70% going to schools based on their share of statewide enrollment).
UMG’s chief people and inclusion officer and co-chair of the Taskforce for Meaningful Change Eric Hutcherson, who says this is the first proposition UMG has officially gotten behind as a company, notes that by exposing more kids to music education, the new funding will inevitably inspire future leaders in a variety of music industry roles that go beyond just being an artist or producer. “What you find is that these industries have all of those opportunities available,” he says.
Entertainment veteran Tim Sexton, who executive produced the Emmy-winning Live 8 benefit concert and has been working with Beutner to drum up artist support, adds that for media companies “worried about diversity, equity and inclusion, you don’t need to look further than our public schools to see that’s the population looks like that’s what the workforce ought to look like.”
The proposition would ideally be investing nearly $1 billion into California’s creative economy as well. According to Bloomberg, the state of California is on the verge of becoming the fourth largest economy in the world by overtaking Germany and, according to a study conducted by Otis College of Art and Design, nearly a quarter of the state’s economy comes from the entertainment sector.
“Companies like ours, that moved to California to be at the nexus of entertainment and technology, rely on a skilled workforce to fill the high-quality jobs we create here,” said Universal Music Group chairman and CEO Sir Lucian Grainge in release in April. “If enacted, this initiative will ensure a future job-ready workforce and secure California’s position as the global epicenter of music and the arts.”
Informal opposition to the measure argues that the increased usage of general funds should be used to address other issues like homelessness or paying down state debt, but the Official Voter Information Guide for California residents – which provides arguments in favor and against each proposition – states that “no argument against Proposition 28 was submitted.”
“I’m not a ballot initiative expert, but I have asked some and no one can recall the last time [an argument against wasn’t submitted,” says Beutner. “It’s truly a unicorn.”
The impact of Prop 28 could be felt far wider than California. If the initiative is successful this election cycle, supporters say they would be interested in taking tailored versions of Prop 28 to other states.
“The money that we spent in support of this initiative is one of the best investments the company has ever made for the future,” says Mooney. “We can replicate that investment in other states where music and art is also really important. Think of Tennessee or Florida with Miami, which is the heart of Latin music in the U.S. these days. There’s a lot of opportunities.”
