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Radio royalties for labels back on the agenda in Washington as Fair Play, Fair Pay Act unveiled

By | Published on Tuesday 14 April 2015

US Congress

The latest efforts by the American record industry to force terrestrial radio stations to pay royalties to labels solidified around a new piece of legislation in Congress yesterday, The Fair Play, Fair Pay Act, with four members of the House Of Representatives backing the bill: Democrats Jerrold Nadler, John Conyers Jr and Ted Deutch and Republican Marsha Blackburn.

As much previously reported, federal copyright law in the US is unusual in that it does not provide a general public performance right to the owners of sound recording copyrights, which means that, unlike in pretty much every other country, you do not need a licence from a record company to play a sound recording in public or, say, on the radio.

There is a public performance right attached to the song copyright, so radio stations need a licence from and to pay royalties to songwriters and publishers, but they don’t pay anything to artists and labels. This anomaly was the result of a deal between the record and radio industries back in the 1960s, when the record labels first pushed for federal copyright protection for sound recordings and the powerful broadcast lobby threatened to scupper the whole plan. But the labels have been trying to rewrite the law ever since.

The classic argument from the broadcasters is that radio airplay constitutes free promotion and therefore they shouldn’t have to pay for the privilege of playing records. Which might work for when radio stations play new releases, but hardly applies to the plethora of stations playing music from the last century. Plus – as the music market moves from ownership to access business models online – even with new music, airplay becomes consumption rather than marketing.

The Fair Play, Fair Pay Act also aims to overcome the pre-1972 issue that has been rumbling around the courts in America for a while now. While AM/FM radio stations do not pay royalties to labels, online and satellite radio stations do, because the Digital Millennium Copyright Act applied a ‘digital performing right’ to the sound recording copyright.

But because federal copyright law only applies to recordings released since 1972, some online radio services argue that they do not need to pay royalties for pre-1972 repertoire. Though ironically, while fighting this argument in the Californian and New York courts – because pre-1972 recordings have copyright protection through state law – judges have started to err towards saying that at a state level a general public performing right exists, which would technically mean AM/FM stations paying royalties as well as digital services.

If passed, the Fair Play, Fair Pay Act would end that particular debate, and all the confusion around pre-1972 catalogue, by simply saying that a general public performance right exists on all sound recordings that are still within copyright Stateside.

musicFIRST, a music industry group that has been lobbying on this issue for some time, unsurprisingly welcomed yesterday’s proposals in Congress, telling reporters that we now “stand at the doorway of an incredible opportunity – a once-in-a-generation chance to make radio work better for music creators, radio services, and, most importantly, music fans”.

The musicFIRST statement went on: “It is time for Congress to update music licensing laws. AM/FM radio, satellite radio and internet radio exist side by side in car dashboards and compete for the same listeners. But whether performers and copyright owners are paid, and how much, depends solely on what button you press or app you choose. On internet radio, it is one rate. On satellite, it is a different, lower rate. And on AM/FM, there is no rate at all – music creators get paid nothing. I think that we can all agree that makes no sense”.

“Now, some digital services are claiming they don’t have to pay for pre-72 recordings. Several court decisions have already dismissed this absurd claim. The solution: all radio services should pay under the same ‘fair market value’ royalty standard for all of the music they play. Like everyone else who works, creates, or innovates, music creators deserve fair pay for their work”.

“It’s a question of basic economic fairness, but it is also a matter of fair competition between music services. No more special privileges for old technologies. No more giveaways. No more special interest exemptions and subsidies. No more picking winners and losers among radio platforms. Let the best services win – fair and square, on the depth of their playlists and the quality of their products.

“Fair market value for music will encourage creativity by music creators. It will promote innovation among music services. And – most importantly – it will give fans the best music they have ever heard – delivered in the most exciting ways they could ever imagine”.

But needless to say, the radio industry isn’t ready to give up this fight just yet, having successfully kicked past attempts at introducing a public performance right for sound recording owners out of the park.

The Free Radio Alliance said: “The performance tax legislation introduced by Rep Jerrold Nadler is mostly a patchwork of past proposals, which have failed to pass Congress previously. It’s ironic that the only thing the music industry seems to be able to agree upon is taking more money from others, like radio stations, for themselves”.