Two competing bills relating to the proposal that American radio stations should start paying royalties to recording artists and record labels are back on the agenda for US Congress to consider during its new term.
Both bills have been doing the rounds in Washington for some time now. One proposes changing the law to introduce a radio royalty for recordings. The other, somewhat bizarrely, proposes doing nothing, so that US radio stations can continue to exploit the valuable loophole that lets them play music without paying any money into the record industry.
No surprises then that the US National Association Of Broadcasters is a big champion of that do nothing bill, otherwise known as the Local Radio Freedom Act.
Freedom, in this context, is not about radio stations being free to play music without paying the record industry, but the freedom of Americans to access news and information, because “Americans depend on the local news, traffic updates, severe weather alerts, entertainment and sports they can freely access through local stations”.
Or so declared NAB CEO Curtis LeGeyt last week when welcoming the reintroduction of the do nothing proposal. “Imposing a new performance fee on top of the hundreds of millions that local stations already pay in copyright and streaming fees”, he added “would severely hinder our ability to provide these free and essential services to our listeners”.
The bill proposing introducing a new radio royalty is called the American Music Fairness Act and, even less of a surprise, it is strongly supported by the music industry.
When it was reintroduced in Congress earlier this month, Recording Academy boss Harvey Mason Jr said, “For more than a century, American artists and producers have been denied the basic right to earn compensation for their own creation broadcast on AM/FM radio. We urge Congress to finally pay creators for their work”.
US copyright law is unusual in that it doesn’t grant recording artists or record labels control over the broadcast of their recordings on AM/FM radio, which means radio stations don’t need to get licences from or pay any royalties to the record industry.
Those radio stations do pay royalties to songwriters and music publishers, and to artists and labels too for online services, hence the “copyright and streaming fees” referred to by LeGeyt in his statement.
However, in most other countries radio stations also pay recording royalties on their AM/FM broadcasts, and that doesn’t seem to “severely hinder” them from continuing to air local news and traffic updates, nor anything else that might fall under the great big banner of freedom.
For decades now the music industry has been urging lawmakers in Washington to introduce a radio royalty for recordings, so far without success. The lack of a radio royalty in the US market also impacts on artists and labels in the UK and elsewhere whose music is played on American stations.
It also means that US artists and labels don’t always earn royalties when their tracks are played on radio stations abroad, because in some countries copyright law applies a ‘reciprocity approach’, meaning radio royalties only flow to artists and labels in other countries where the same radio royalty exists.
The problem for the record industry is that the radio sector has always been powerful in Washington, partly because the radio industry has a strong presence in every city and state, which means pretty much every representative and senator has a radio station to lobby them. Whereas the record industry has a smaller number of regional hubs around the country.
The fact that both Republicans and Democrats back something like the Local Radio Freedom Act demonstrates that lobbying power.
While it might seem strange to have a formal proposal in Congress for the existing law to remain unchanged, the Local Radio Freedom Act provides a rallying point that radio industry lobbyists can use to apply pressure on members of Congress to publicly declare their opposition to the radio royalty reforms proposed in the competing bill, by officially declaring support for doing nothing.
As for the justification for opposing the reforms, airplay is free promo for artists and labels, and that should be more than adequate compensation, argues the radio industry - an argument that it has been using against radio royalties for as long as the music industry has been lobbying to get them.
It was never a great argument, but is even less compelling in an era when - with at least some fanbases and genres - radio isn’t that important a promotional tool any more.
But that didn't stop the NAB trotting out that same argument against the American Music Fairness Act. “For decades, radio has helped artists reach audiences and grow their fanbases”, a spokesperson for the radio group said.
“Now, the recording industry wants Congress to undermine the very platform that fuels its success”, they added. “Lawmakers have repeatedly rejected this misguided effort, recognising the harm it would cause local stations and listeners”.
“Instead of imposing new fees on radio”, they concluded, “Congress should stand with local communities and support the Local Radio Freedom Act, which had the support of more than 250 bipartisan members of the House and Senate in the last Congress”.