performance rights
Country star Randy Travis had members of Congress gushing and brought star power to an otherwise businesslike hearing titled “Radio, Music, and Copyrights: 100 Years of Inequity for Recording Artists,” held Wednesday (June 26) by the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet.
“This is a great honor,” said Rep. Darrell Issa (R-Calif.), chair of the subcommittee, adding that the other three witnesses “will have to live in his shadow.”
Travis, who has had difficulty speaking since suffering a stroke in 2013, was represented at the hearing by his wife, Mary Travis. His circumstances made him a fitting witness and supporter of the American Music Fairness Act (AMFA), a bill that would create a performance right for sound recordings at terrestrial radio. Unable to sing, Travis has given up touring and relies on royalties for his long-term health care. A country artist who performed others’ compositions would benefit from royalties from continued airplay on terrestrial radio.
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“This piece of legislation is essential to correct 100 year old issue regarding artists and non payment for their work performed on the most prominent music platform in America — one which they helped to build and sustain,” said Mary Travis.
AMFA would establish fair market value for radio performance royalties similarly to how rates are set for streaming platforms. It also compels foreign radio stations to pay U.S.-based artists for the performance of their songs. Outside of the U.S., radio stations commonly avoid paying performance royalties to American artists and record labels despite the existence of a similar performance right in those countries.
The bill would task the Copyright Royalty Board, the three-judge body that determines streaming, satellite radio and mechanical royalties rates, with setting the royalty rates for the new license. Under AMFA, stations that earn less than $1.5 million in annual revenue (and whose parent companies make less than $10 million in annual revenue) to pay $500 annually. Small, non-commercial stations with annual revenue less than $100,000 would pay as little as $10 per year.
“I think you’ve gotten the balance exactly right,” Mike Huppe, president and CEO of SoundExchange, told members of the committee. While small broadcasters would pay modest fees under AMFA, the large national corporations that dominate the broadcasting industry would pay more. Huppe argued they could easily afford it. “This is a $15 billion business in the US,” he said. “Eighty-eight percent of all Americans listen to radio. The biggest broadcast groups are becoming bigger and more powerful.”
Radio broadcasters don’t see it that way, though. Curtis LeGeyt, president and CEO of the National Association of Broadcasters, warned the committee that any additional royalties would be too much. “AMFA would impose a new royalty on local radio that is financially untenable for broadcasters of all sizes,” he said. Eddie Harrell Jr, regional vp and general manager of Radio One, agreed. “Make no mistake that a new performance royalty imposed on local stations would create harm for local stations, listeners and the recording industry itself,” said Harrell. Local broadcasters, he said, “are operating on extremely tight margins right now.”
The most dire warnings from LeGeyt and Harrell often centered around AMFA’s threat to radio stations’ ability to serve their communities. Because stations’ revenue are not growing, Harrell explained, any additional expense threatens services stations provide to their communities — he cited a program that collects donated items for needy families — and undermine their ability to broadcast during natural disasters. “Those are the things that are lost in what we do as opposed to just playing the music and so our ability to lead community efforts like that would be impacted by any new expense that we’d have to endure.”
While Huppe acknowledged the value radio stations provide to their communities, he wondered why musicians shouldn’t be paid when stations pay to syndicate talk radio shows and license sporting events. “Why should Randy Travis have to be the one to bear the load of this community effort and all the charitable work?,” Huppe asked.
Artificial intelligence’s threat to the music business was interspersed into the conversation about performance rights and royalties. Travis proved an exceptional witness on this topic, too, having recently released his first new track since his stroke in 2013, “Where That Came From,” with the help of generative AI software to recreate his voice. (Issa paused the hearing for a minute to play the song over the loudspeakers by pressing his smartphone next to his microphone.) “His piece of AI work was humanistic and artistic,” said Mary Travis. “And that’s the difference [between] the good and the bad AI.”
When asked by Rep. Jerry Nadler (D-NY) if users of generative AI software should be able to create unauthorized copies of a singer’s voice, Mary Travis was succinct: “Absolutely not,” she said flatly. Later, she compared unauthorized use of an artist’s voice to identity theft. “There needs to be laws that are in place to keep that from happening,” she said, “which means consent and compensation and attribution and provenance.”
But the hearing mostly focused on the economics of the radio business and the two sides’ inability to come to agreement. Huppe said the NAB’s strategy “is to run out the clock” and wait for another bill to be introduced in the next Congressional term. LeGeyt took “significant issue” with Huppe’s characterization and blamed the recording industry’s representatives for not supporting the conversations. “NAB stands willing to be in a conference room,” he said.
Rep. Issa, however, doubted LeGeyt’s willingness to make a deal with record labels. Noting that the NAB has been negotiating on Radio One’s behalf, Rep. Issa asked Harrell if his stations “would be willing to pay something to get this problem to go away?” “Mr. Chairman, I would not say that,” Harrell replied.
Minutes later, Issa took an admonishing tone with LeGeyt. The NAB did not offer “one penny” in higher royalties in their negotiations, Issa claimed, and if artists started to encourage people to listen only to radio station’s streaming offering, the cost to stations would be “far more than a modest concession,” said Issa.
ASCAP collections grew 14.1% to $1.737 billion in 2023 and payouts to songwriters and publishers increased 14.7% to $1.592 billion, the performance rights organization reported Wednesday (Feb. 28). Those figures represent a record year for ASCAP in both revenue buckets, as well as all-time highs for any U.S. performance rights organization ever, ASCAP claimed.
The last time BMI revealed its annual financials — for the year ended June 30, 2022 — the PRO reported collections of $1.573 billion and pay outs of $1.471 billion. BMI did not disclose any full-year financial information in its most recent annual report for its fiscal year ended June 30, 2023, and is not likely to disclose any financial information going forward, since it’s now owned by institutional investor New Mountain Capital and will be operating on a for-profit basis. ASCAP now stands as the only U.S. PRO operating on a not-for-profit basis.
ASCAP’s collections break down to $1.327 billion domestically (up 12.7% from the year prior), and $410 million internationally (up 19.2%). For distributions, ASCAP paid out $1.217 billion domestically (up 16.1%), and $375 million internationally (up 10.3%).
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“ASCAP’s mission and not-for-profit business model are more important now than ever before, as artificial intelligence transforms the music landscape, and the need for legislative advocacy to protect creators in DC has never been more important,” ASCAP chairman and president Paul Williams said in a statement. “ASCAP will always be a champion for the humans who create music and demand transparency and fair payment from those who exploit our work. ASCAP makes it possible for our songwriter and composer members to write the next song, to earn a living and to support their families. No one else in the industry has the backs of songwriters like ASCAP.”
In announcing its financial results, the organization pointed out that unlike its competitors, ASCAP has no debt, no shareholders, no private owners and no private equity investors. In other words, ASCAP’s music creator and publisher members are the sole beneficiaries of ASCAP’s financial success.
Moreover, it noted that a democratically elected Board of Directors composed of music publishers and music creators sets the royalty distribution rules and cost allocations based on follow-the-dollar principles. It is the only U.S. PRO that makes those distribution rules publicly available on its website providing transparency to its membership.
“We are delivering industry-leading technical innovation, legislative advocacy and revenue growth that solely benefits our members, not outside investors or shareholders,” ASCAP CEO Elizabeth Matthews said in a statement. “As we like to say, private equity never wrote an iconic love song which is why we fight purely for songwriters, composers and publishers, not for those who use creators and their works of art for their own profits or to secure their own debt. ASCAP differs from others because our mission and purpose is clear and unique.”
In looking at new technology, the PRO reported that in 2023 its board of directors adopted six principles to guide its response to the technology and later submitted them on behalf of members to a U.S. Copyright Office study on generative artificial intelligence. And it reported it had held some AI symposiums for members.
During the year, ASCAP membership grew by 66,000 new members bringing total membership to 960,000 members. Some of those new members included PinkPantheress, Jack Antonoff, Tyla, and Jared Leto and Shannon Leto of 30 Seconds to Mars, as well as art-pop singer-songwriter Caroline Polachek, alt-rocker d4vd, jazz vocalist Samara Joy, country genre bender Jessie Murph, dark balladeer Chappell Roan, post-punker ThxSoMuch and writer-producer Alexander 23, among others
Moreover, the organization says its song catalog now includes 19 million copyrights that consists of music from the likes of Beyoncé, Billy Joel, Cardi B, Dua Lipa, Garth Brooks, Jay-Z, Katy Perry, Lil Baby, Lin-Manuel Miranda, Mariah Carey, Olivia Rodrigo, Paul McCartney, Stevie Wonder and Usher, among others.
Getting back to the financial numbers, ASCAP notes that since the launch of its strategic growth plan in 2015, its compound annual growth rate (CAGR) for total revenue through 2023 has increased to 7%, and the CAGR for total distributions over the same time period rose to 8%.
Moreover, ASCAP reported that in 2023, audio streaming revenue rose 21%, general licensing revenue rose 23%, radio revenue rose 10% and audio-visual revenue rose 3% as compared to 2022. However, ASCAP didn’t break out the specific revenue numbers like it used to in the years preceding 2015, the last year that ASCAP provided extensive insight into its financials.
As a percentage of revenue, overall ASCAP paid out 91.7% of collections in 2023, which implies expenses accounting for 8.3% of revenue. Yet, ASCAP executives also say the organization’s pays out nearly 90% of collections, which means overhead amounts to a little bit more than 10% of revenue.
In any event, ASCAP claims its 90 cents payouts on every dollar of collections yield “the highest value exchange applied to the lowest overhead rate provided to creators and publishers of any U.S. PRO.”
Catch Point Rights Partners, the private-equity backed music rights acquisition firm that has purchased the publishing of such artists/songwriters and/or producers as Brantley Gilbert, Yelawolf and All Time Low, is now offering a program through which it will buy performance rights income streams from songwriters while allowing them to retain ownership and control of all of […]
Global Music Rights, the boutique performance rights organization that represents Bruce Springsteen, Bruno Mars, Prince, Drake, Pharrell Williams, John Lennon, Eagles and others, has filed a copyright lawsuit against a Vermont-based group of radio stations that has allegedly played songs for years without a license.
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The lawsuit targeted Vermont Broadcast Associates, which operates seven radio stations serving local communities in Northern Vermont, New Hampshire and Quebec. The complaint, filed in Vermont federal court Thursday, also names Bruce James names as the owner of the company and a defendant.
GMR claims that VBA’s stations have been playing 66 songs in the GMR catalog since 2017 without a license, amounting to 1,600 violations of copyright law, even though the PRO has submitted 10 separate written licenses during that time period.
“Defendants’ infringements were neither incidental nor accidental,” the group’s lawyers write in the complaint.
After being founded by longtime music exec Irving Azoff in 2013, GMR spent years in court litigating over licensing terms with the Radio Music Licensing Committee, the group that negotiates music licensing deals for more than 10,000 member stations. The case finally settled in 2022 with a long-term licensing agreement.
In Thursday’s complaint, GMR claims that VBA is a member of the RMLC but nevertheless ignored “GMR’s communications and chose not to enter into GMR licenses, but continued playing GMR songs on its stations.”
“While we only turn to litigation as a last resort, it is long established U.S. law that GMR’s clients’ copyrighted works cannot be publicly performed without a license,” GMR’s general counsel Emio Zizza said in a statement. “All the radio stations that have entered into a GMR license and are paying their fees deserve the benefit of that license. Station groups who don’t want to pay for a GMR license are not entitled to play GMR’s immensely popular catalog of songs, depriving creators of their due.”
The GMR complaint, filed by the law firms of Lynn Lynn Blackman & Manitsky, P.C.; and O’Melveny & Myers LLP — claims that “GMR is entitled to maximum statutory damages of $150,000” if willful infringement is proven for each song played without a GMR license.
In response to a request for comment, Vermont Broadcast Associates owner Bruce James said by e-mail: “I have been working with Zachary Dekel representing GMR and believe we are licensed.” He added he has contacted Mr. Dekel on Friday morning (Jan. 19) to “resolve any issues.” According to the O’Melveny & Meyers website, Dekel is a litigation counsel with the firm.
In response to James’ comment, GMR representatives say that Dekel reached out to the VBA owner many times but a GMR license was never taken, which is why the lawsuit was filed.
The case is not the first time GMR has gone after radio stations that allegedly failed to pay. In October 2022, the group filed three similar copyright cases against radio stations in California, Connecticut, Florida, claiming each had made the “strategic decision” to simply not pay performance royalties to the group and “hoped to get away with it.”
“Defendants did not get away with it,” GMR’s attorneys wrote at the time. “Its stations have been caught red-handed violating the law.”
BMI has released its annual report for its fiscal year and, for the first time ever, it hardly contains any financial information.
Such information as how much it collected or distributed in the recently completed year is not revealed in the annual report, even though BMI has historically revealed detailed financial information every year. The report also doesn’t show how much collection and distribution amounts changed from the prior year’s $1.573 billion and $1.471 billion, respectively.
The only information indicating BMI’s financial performance in the year is an observation by BMI president and CEO Mike O’Neill that “every distribution we issued in our last fiscal year was higher than the corresponding one from the previous year.” No further specifics were provided.
The only numbers in the entire annual report that give any indication of how much activity BMI tracked in the year was a note that the performance rights organization processed 2.61 trillion performances, while its membership grew 7% to 1.4 million affiliates, and that it licenses and collects on behalf of 22.4 million works. Dollar amounts only appear once in the 24-page report, when O’Neill states in the opening note that BMI’s November distribution is forecast to be $400 million — which he labeled another record “that would make BMI the first ever PRO to ever distribute this high an amount in a single quarter.” The November quarter is in its current fiscal year, and not a part of the completed year covered in the annual report.
Last October, BMI announced it was switching from a not-for-profit model to a for-profit one. Now, in an opening note to this latest report, O’Neill disclosed the organization’s goal is to distribute 85% of the licensing revenue it collects to songwriters and publishers. The other 15% of collections, he wrote, will cover overhead and allow BMI to achieve a modest profit margin, noting that expenses typically comprise about 10% of revenue. In recent years, BMI’s distribution has been about $90% of revenue.
If BMI creates new M&A opportunities, however, or enters new businesses or offers expanded services, O’Neill said that BMI “will look to take a higher margin on any revenue generated, though always with the goal of sharing that new growth with our affiliates.” In other words, for those business, BMI may not limit itself to a 5% profit margin.
O’Neill also noted that “if BMI decides to seek outside capital or borrow money to invest in new services and opportunities, any repayments will come out of our retained profits and not distributions.”
In the current fiscal year, O’Neill reported that under the new business model BMI’s February distribution was its largest ever, up 6% over the previous year. That was then surpassed by the May distribution, which was up 15% over the corresponding year-earlier period. O’Neill predicted that the next two distributions for the remaining calendar year will follow that trend. For the full calendar year, distributions are projected to be 11% above calendar 2023, the report noted.
Going forward, O’Neill said BMI will announce percentage increases, but apparently will continue to withhold all other financial information.
Seemingly responding to immense pressure from the songwriter community and music publishers who have publicly expressed their unhappiness about BMI’s switch to profitability and its evasion of the many questions they asked, after disclosing the 85% distribution goal, O’Neill’s opening note repeats many of the thoughts he has already shared through open letters on the issue. “We changed our business model last year to invest in our company and position BMI for continued success in our rapidly evolving industry,” he wrote. “Our mission remains the same, to serve our songwriters, composers and publishers and continue to grow our overall distributions as BMI has done each year that I have been CEO. In order to continue this trajectory, we need to think more commercially, explore new sources of revenue and invest in our platforms to improve the quality of service we provide to you. I’m pleased to say that we have already made great progress on delivering these goals.”
He also reiterated that BMI changed its business model to better position the company for success in a rapidly evolving industry. “Our mission remains the same, to serve our songwriters, composers and publishers and continue to grow our overall distributions as BMI has done each year that I have been CEO,” O’Neill wrote. “In order to continue this trajectory, we need to think more commercially, explore new sources of revenue and invest in our platforms to improve the quality of service we provide to you.”
While BMI can accomplish its plans and goals on its own, O’Neill wrote, “We also recognize the opportunity to substantially accelerate our growth by partnering with a like-minded, growth-oriented investor with a successful history of building businesses. Of course, that partner would need to share our vision that driving value for our affiliates goes hand-in-hand with growing our business and building a stronger BMI.”
As Billboard previously reported, BMI is in an exclusive period with New Mountain Capital in a deal to sell the PRO — which is currently owned by radio and television broadcasters — at a $1.7 billion valuation. The valuation, however, sources say, is under downward pressure as negotiations continue.
While stating nothing has yet been signed, O’Neill wrote that the for-profit business model and the strategy outlined “will hold true for BMI whether or not we move forward with a sale.” In other words, BMI will continue to be a for-profit business, regardless of whether it sells or not.
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