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Latest effort to get a broadcast royalty for US artists and labels is launched in Congress

By | Published on Friday 25 June 2021

US Congress

The US record industry and its supporters in Washington have launched their latest attempt to force AM and FM radio stations in the country to pay royalties to artists and record labels as well as songwriters and music publishers. The proposed American Music Fairness Act would seek to bring US copyright law in line with copyright rules in most other mature music markets.

US copyright law is unusual in that it doesn’t provide the owners of sound recording copyrights with full performing rights. This means that when music is broadcast on AM/FM frequencies or played in public, no licences are required from or royalties paid to the record industry. Those broadcasting or playing recorded music in public only need licences covering the separate song rights.

The record industry has been trying to get this changed for decades, at least so that the country’s AM/FM radio stations pay royalties to artists and labels, like their counterparts do in most other countries. And to that end, there have been various proposals in Congress over the years, most recently the Ask Musicians For Music Act.

However, to date, those attempts have been unsuccessful, the radio industry being a powerful lobby in Washington. So much so, last year the National Association Of Broadcasters secured the support of more than half of the then members of the House Of Representatives in the US for a thing called the Local Radio Freedom Act, a bizarre bit of legislation designed to, well, not change anything.

It was basically a pre-emptive strike by the radio sector to show that it had enough support in Congress to block any bill to introduce a performing right for recordings.

However, the record industry does have its own supporters among American law-makers on both sides of the political spectrum, including Democrat Ted Deutch and Republican Darrell Issa in the House Of Representatives, who together formally introduced the American Music Fairness Act yesterday.

A statement from the two Congress members said: “For decades, American terrestrial radio stations have not been required to compensate performers when they play their music – making the United States one of the only developed countries in the world with these outdated laws. The American Music Fairness Act would close this loophole and require broadcasters to pay artists when they use their work”.

Keen to stress that the new royalty obligations introduced by the Act would mainly hit the more commercial end of the radio sector, they added: “The legislation includes a specific exemption for small radio stations that make less than $1.5 million per year, requiring them to pay only a nominal annual fee to play as much music from as many artists as they want while large corporate broadcasters would pay full freight”.

The proposals are backed, unsurprisingly, by musicFIRST, a lobby group that has been campaigning on this issue for years, and which recently appointed a former Congressman, Joe Crowley, as its Chairman.

It said yesterday that Deutch and Issa’s proposed new law “rectifies an injustice that has existed for decades: despite the hundreds of billions of dollars that massive media corporations like iHeartRadio and Cumulus have been paid by advertisers, they have never shared a penny of that money with artists. Across the country, thousands of artists and music creators work to build a career to support their families by playing the music they love – but the rules are rigged against them”.

There is a digital performance right under US copyright law, meaning that satellite and online radio services do need licences from the record industry, which are usually secured via collecting society SoundExchange. That obviously gives AM/FM radio stations a competitive advantage over satellite and online services, another issue that the American Music Fairness Act would address, musicFIRST argued.

“The American Music Fairness Act also levels the playing field”, it went on, “by ensuring all competing music platforms are treated the same and ending the archaic and unfair subsidy under which AM/FM stations pay nothing for recorded music while their digital competitors pay fair market value royalties. Music services should compete on the merits, not based on legal loopholes that distort the market and shortchange music creators”.

The aforementioned Crowley added: “The rules have been rigged in favour of a few massive, multi-billion-dollar media companies for far too long. I’m thankful my former colleagues are taking up this cause. The introduction of the American Music Fairness Act is a crucial step in the fight for music fairness, and I’ll do everything in my power to help ensure it gets signed into law. It’s time to balance the scales and ensure that hard-working artists all over this country are paid fairly for everything they do to make the music we love”.

Needless to say, the National Association Of Broadcasters has already hit out at the proposals. Throughout all the decades that the record industry has been trying to get a broadcast royalty in the US, the NAB has been pretty much employing the same argument against such a thing.

Basically that radio airplay is free promo for artists and labels – which still hire pluggers to get their music played on air – and therefore those artists and labels should be thankful for the exposure and shut the fuck up about being paid.

“NAB strongly opposes the American Music Fairness Act or any imposition of a performance royalty on America’s local radio stations”, the trade group’s CEO Gordon Smith said yesterday. “For decades, broadcast radio has enjoyed a mutually beneficial relationship with the music industry, launching and sustaining the careers of countless artists, promoting album sales and streams, and helping to foster a robust music-creation environment that is the envy of the world”.

Smith then cited the good old Local Radio Freedom Act, which doesn’t currently have quite as a strong a backing in Congress now as compared to last year, since the arrival of a load of new Representatives and Senators back in January. But it still has quite a lot of support.

“We thank the 138 Representatives and eighteen Senators who are currently cosponsoring the Local Radio Freedom Act”, the NAB chief went on, “which acknowledges the long-standing connection between radio and the music industry as well as the tremendous service hometown radio provides to local communities every day”.

“Broadcasters remain open to working with the record labels to reach a comprehensive and reasonable solution to this issue that reflects the incredible value provided by local radio to musicians, labels and our millions of listeners over-the-air and online”, he concluded. “It is unfortunate that the record industry refuses to have those discussions”.

The NAB’s “you-get-free-promo-so-fuck-off” argument was never that compelling, especially when you factor in all the golden oldie and nostalgia stations that were never likely to lead to that many record sales. Though when radio airplay was the top marketing priority for most new release campaigns in the record industry, the fact labels were constantly schmoozing (and sometimes even bribing) stations to get their tracks playlisted did arguably tip the balance in the broadcasters’ favour on this debate.

But, of course, while radio airplay still has a role in music marketing – especially for certain genres and fanbases – it is becoming much less important as the years go by, as Instagram advertising, TikTok influencers and the Spotify algorithm become the key tools for launching artist careers and driving royalty paying streams. Which means the NAB’s position gets weaker as the years go by. Though whether that trend is enough to get majority support for this particular copyright reform in Congress remains to be seen.

It could as yet be that US copyright law only catches up with the rest of the world once most radio-style listening happens online anyway, and the revenues of the AM/FM radio sector are already in steep decline. But we shall see.