Music Performers In US Policy Fight For Payment From Broadcasters

[Note: new Commerce Department letter added 16 June]
By Liza Porteus Viana for Intellectual Property Watch
WASHINGTON, DC – Performance-rights groups and broadcasters went head-to-head Wednesday as the two sides testified before the United States Congress as to whether conventional radio broadcasters should pay performance musicians if the broadcasters play their music.

US lawmakers have introduced The Performance Rights Act in both the House and the Senate in an effort to make sure performing artists are compensated when their sound recordings are played over the radio. Radio stations pay songwriters in the US for the right to broadcast, but not performers. Satellite radio and internet radio, as well as cable companies, do pay for the same right.

[Note: The Commerce Department on 10 June sent a letter of support of performance rights to the committee, saying the changes in the proposed legislation are a matter of “fairness and equity.” Letter available here.]

The bills’ goal is to end the “glaring inequity” in current US law, Representative Howard Berman (Democrat-California), chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property, said Wednesday during a panel hearing on the issue.

“The US is one of the only developed countries in the world … that doesn’t require over-the-air radio stations to compensate artists and musicians,” Berman said.

The bill is important to US competitiveness, since “our law puts us at odd with the rest of the world,” said Rep. Brad Sherman (D-Calif.). We need to “reach out to the world and show that we want to harmonise our law with expectations.”

The bill would end the current broadcaster exemption and give noncommercial radio stations – public, education and religious stations – the option of paying an annual flat fee in order to soften the financial blow. It also provides similar options for commercial stations with annual revenue under $1.25 million – roughly 77 percent of all music radio stations in the US. The Copyright Royalty Board would determine how much broadcasters pay.

Several lawmakers refuted broadcaster arguments that the bill is the equivalent of a “tax,” and that radio is doing musicians a favour by promoting their music and getting it out to the public. The current exemption could be seen as a type of “corporate welfare,” they said.

Sherman compared the promotion argument to a scenario in which the Chinese start mass-producing Mickey Mouse t-shirts and not paying The Walt Disney Company for use of the Mickey logo.

Performing-rights advocates argued that the many performing artists who do not write their own songs or who do not achieve mega-star status have to sit idly by while broadcasters rake in advertising revenue from playing their songs. Some have to tour endlessly and late in life just to make a living.

“Why is the broadcasters’ exemption allowed to rob us of our hard-earned income, including the millions from broadcasters overseas who don’t have to pay us because our own country doesn’t?” testified Nancy Sinatra, the singer-daughter of Frank Sinatra, who also fought for performance rights. “In what other business is the chance of some promotion justification for taking another’s property?”

Sinatra is a member of the MusicFIRST coalition, which includes the American Association of Independent Music, American Federal of Musicians, The Latin Recording Academy, and the Recording Industry Association of American, and performers such as Michael Buble, Sheryl Crow, The Doors, Earth, Wind & Fire, Paul McCartney, and Gloria Estefan.

“The truth is that the art we make has a business value,” said Thomas Lee, international president of the American Federation of Musicians of the United States and Canada. “Radio is not the only industry that uses recorded music to make money. But it is the only one with a free pass to pay performers nothing. That’s unfair, any way you cut it.”

They also argued that the current law hurts the US economy, because it causes performers to also lose foreign radio payments.

“The fact that the United States remains the only developed country in the world that does not compensate performers when their music is played on the air, keeping company in this regard with North Korea, Iran and China, probably says it all right there,” Sinatra said.

Broadcasters: System ‘Not in Need of Fixing’

But broadcasters argue that the recording industry wants Congress to impose the “performance tax” to make up for the lost revenues it has suffered with the evolution of new digital technologies that offer up alternative distribution models. They noted that before 1995, US copyright law did not recognise any public performance right, but Congress that year created a narrow digital performance right to address specific piracy and copyright concerns. This “tax” would particularly hurt smaller, locally-owned radio stations, they argued.

“The simple reality is that broadcasters are not responsible for the financial woes of the recording industry,” testified Charles Warfield, president and chief operating officer for ICBC Broadcast Holdings, on behalf of the National Association of Broadcasters (NAB). “Particularly in the current highly competitive environment, where local radio broadcasters are struggling to develop their own business models that address the realities implicit in new media, it makes little sense to siphon revenues from broadcasters in order to prop up the recording industry’s failing business model.”

Broadcasters also argue that the current relationship between the performers and radio stations is a mutually beneficial one, in which the radio benefits from advertising revenue and artists get free air time, which boosts record sales. They cited Nielson Company data from companies that track the relationship between “spins” of songs on the radio and the resulting sales demonstrate that both artists and record labels reap big rewards for local radio time. Between 14 and 23 percent of industry sales of albums and digital tracks can be attributed to local radio, which provides artists with $1.5 billion to $2.4 billion annually, according to a new study promoted by NAB.

“I urge the committee to see HR 4789, this Performance Rights Act, for what it is – an enormous fee that will hurt American businesses, small and large, and ultimately, the American consumer,” said Steven Newberry, CEO of the Commonwealth Broadcasting Corporation and also of the NAB. “The current system has produced the best broadcasting, music and sound recording industries in the world. It is not broken and not in need of fixing.”

Broadcasters also said the argument comparing US law to foreign protections of performers is not so clear cut. Newberry cited the United Kingdom as one country where copyright owners have a right of remuneration for the performance of their sound recordings, but protection in that country extends only 50 years after the date of release of the recording. The US provides protection for 95 years. The British government recently declined to extend that term another 50 years. It also notes that many countries pay the music composers and publishers more than the performers, but the Copyright Royalty Board decisions in the US have provided much higher rates for performing digital audio transmissions than rates to composers.

“In its reliance on the example of foreign law, the American recording industry is, in effect, inviting policy-makers to compare non-comparables,” Newberry said.

Liza Porteus Viana may be reached at info@ip-watch.ch.