The boss of US record industry collecting society SoundExchange has used the news that iHeartMedia will make $100 million from the sale of BMI to again call for politicians to back the American Music Fairness Act.
SoundExchange CEO Michael Huppe wrote on Twitter: “The irony of a radio giant profiting millions while underpaying performers is yet another reason why the American Music Fairness Act is so vital for #MusicFairness”.
A quirk in American copyright law means AM/FM music radio stations get away with not paying anything to artists and record labels. The American Music Fairness Act would change that, but is being fiercely opposed in Washington by big radio, including iHeart.
US radio stations do have to pay royalties to songwriters and music publishers, which they do via collecting societies like BMI. Though iHeart now stands to profit in a major way from that side of the music rights business too, because it is a shareholder in BMI, which is in the process of being sold to a consortium led by New Mountain Capital. The radio firm told its investors earlier this week that it expects to make about $100 million from that deal.
Most of the music industry's collecting societies are not-for-profit organisations owned by their members. Which always made BMI, owned by a group of broadcasters, unusual. Nevertheless, it still operated on a not-for-profit basis until last year. When it announced a shift to a for-profit business model last October, BMI said that its broadcaster shareholders wouldn't actually take a cut of any profits in the short-term, but would benefit from any future sale of the society.
The shift to a for-profit model and sale to New Mountain Capital have already proven controversial within the songwriting community, even though BMI insists the changes will ultimately benefit the writers and publishers it represents, who will also get $100 million of the money generated by the sale. That major media firms will profit so much from the deal will likely further annoy writers, many of whom may not have even been aware that the radio sector actually owned the organisation.
Which, given iHeart’s ongoing opposition to the American Music Fairness Act, means music-makers now have two reasons for disliking the radio giant.