US biz attempts again to get radio to ‘pay for play’

In a similar move to the Australian music industry’s current battle with the commercial radio sector, the American biz is again trying to remove loopholes which allow terrestrial radio stations to avoid paying artists and record labels for playing their music.

Four members of Congress have introduced the Fair Play, Fair Pay Act of 2015. If passed, AM/FM radio would join internet and satellite radio in forking out. Additionally, it would also require all radio to pay for master recording royalties on music created before 1972.  In the past, under the Digital Millennium Copyright Act, some older digital services paid discounted rates.

Jerrold Nadler, one of the four, called the current system “antiquated and broken” and that it was a “great injustice” that rights holders were not getting remunerated for their work.

In the past when the record industry tried to change the system, it was beaten by the powerful radio lobby. It argued that smaller stations (those earning less than $1 million only pay $500 a year, college radio $100) would go out of business. (In Australia, in 1969, the radio sector got the Liberal Government of the time to cap its payments at 1% of annual earnings).

The Free Radio Alliance dismissed the proposed legislation as “mostly a patchwork of past proposals, which have failed to pass Congress previously.” Its statement added, “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.”

Gone are the days when record companies were content with radio’s argument that airplay was free publicity for their artists which led to sales. But as their revenue dropped, label chiefs grumbled how radio and the likes of MTV became multi-billion dollar industries from getting their products for free.

SoundExchange, a performance rights organisation that collects and distributes digital performance royalties, stated, “For decades, music services have gotten away with building their business on the backs of hardworking musicians, paying unfair rates — and in the case of the $17.5-billion radio industry, paying nothing at all — for the music they use.”

The Fair Play, Fair Pay Act, added its President and CEO Michael Huppe, “will bring much needed reform to the music industry and addresses many of the issues that plague the recorded music industry. It is time that we properly pay the artists who put so much hard work into creating the music at the core of these services. If it weren’t for them, these stations would be broadcasting little more than static.”

The American Association of Independent Music (A2IM) called the potential impact of Fair Play Fair Pay “enormous.” Its President, Rich Bengloff, pointed out, “The independent music label sector has a direct impact on our economy, including cultivating thousands of middle-class domestic jobs and employment at the music labels and in related industries.”

Its effect, Bengloff went on to say, would flow on to more work for the rest of the industry, including video directors, production teams, sound engineers, physical goods manufacturers, photographers and publicists as well as “non-music businesses like musical instruments and electronics and from technology and digital media usages, including television, films, games and radio. Music creation feeds these businesses with consumer content.”

The US is one of 34 OECD countries that does not have an AM/FM performance right, and hence exempt from international agreements. Bengloff said, “This ‘exception’ causes us to lose around $100 million in royalties from other countries, royalties that could flow to U.S. performers.”

This was echoed by the dozen performers who publicly applauded the Act. They included Elvis Costello, Lenny Kaye, Roseanne Cash, Martha Reeves, Cyndi Lauper and Ray Parker Jr. Cash pointed out that the list of countries who do not pay a master recording royalty on terrestrial radio broadcasts, includes China, Iran and North Korea.

“That’s a list that speaks for itself,” she maintained. “Since we export more music than we import, our economy suffers.
Read more in The Music Network here.