New US bill to include terrestrial performance rights

By Emmanuel Legrand 

The US music industry is getting one step closer to having performance rights paid for by terrestrial broadcaters with the introduction on April 13 of the The Fair Play Fair Pay Act Of 2015.  If voted this will put the US on par with most of the rest of the world, especially Europe, where such neighbouring rights have been in place for the past 30 years.

The bipartisan legislation -- sponsored by Congressman Jerrold Nadler (D-NY), Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet, and Congressman Marsha Blackburn (R-TN), Vice Chair of the Energy and Commerce Committee -- would "harmonise and modernise the outdated rules that currently govern music licensing for digital and terrestrial radio broadcasts." 

In addition to getting radio stations to pay royalties to performers and labels, the bill also addresses the issue of pre-1972 recordings, by ensuring that their use by broadcasters and digital platforms is subject to royalties, but would also codify industry practices streamlining the allocation of royalty payments to music producers and ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license (see below).

Said Nadler, "The current system is antiquated and broken. It pits technologies against each other, and allows certain services to get away with paying little or nothing to artists. For decades, AM/FM radio has used whatever music it wants without paying a cent to the musicians, vocalists, and labels that created it. Satellite radio has paid below market royalties for the music it uses, growing into a multibillion dollar business on the back of an illogical ‘grandfathered’ royalty standard that is now almost two decades old. Artists, musicians, producers and radio services alike deserve better. The Fair Play Fair Pay Act fixes this broken and unjust system by making sure all radio services play by the same rules, and all artists are fairly compensated.”

The bill is cosponsored by John Conyers (D-MI), Ranking Member in Judiciary Committee, and Congressman Ted Deutch (D-FL), Member of the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet.

The Fair Play Fair Pay Act is endorsed by the musicFIRST coalition which regroups recording artists, managers, record labels and performance right advocates. “Fair market value for music will encourage creativity by music creators," said Ted Kalo, Executive Director of the musicFIRST coalition. "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."

The Recording Academy, which organises the Grammys, has also been a long-time advocate of performers' rights. Its President/CEO Neil Portnow said that the Fair Play Fair Pay Act of 2015 would "brings fairness to many issues facing music creators in a comprehensive approach - ‎a concept and position advanced and championed by The Recording Academy and it's broad constituency.

The Recording Academy's  Chief Advocacy & Industry Relations Officer Daryl Friedman said that the bill "levels the playing field so that creators can get fair pay." Detailing the provisions in the bill, Friedman said that the bill would address several inequalities in the current system. "First," he said, "the bill would establish a process for setting fair-market royalty rates; create a performance right for artists on terrestrial radio; close the pre-1972 loophole to see that veteran performers receive royalties; and codify royalty payments to music producers for the first time." 

Collective rights management organisation SoundExchange, which collects royalties on behalf of performers and producers of recordings for the use of music on non-interactive digital services such as Pandora or Sirius/XM, also welcomed Nadler's initiative. "For decades, music services have gotten away with building their business on the backs of hard working musicians, paying unfair rates -- and in the case of the $17.5 billion radio industry, paying nothing at all -- for the music they use," said president and chief executive officer Michael Huppe. The Fair Play Fair Pay Act introduced today will bring much needed reform to the music industry and addresses many of the issues that plague the recorded music industry.

However, on the other side of the spectrum, radio organisations reacted megatively to the proposed bill. The Free Radio Alliance, which represents over 1,000 radio stations in the US, pledged to "fight the multinational record labels’ latest attempt to persuade Congress to impose hundreds of millions in new fees on radio stations across America." It called Nadler's bill "a performance tax legislation" and "a patchwork of past proposals, which have failed to pass Congress previously." 

Meanwhile, the National Association of Broadcasters, which has always opposed any such legislation, expressed its disappointment at a bill that "retreads years-old policy positions rather than advancing the copyright dialogue through policies that help grow the entire music ecosystem." NAB's spokesman Dennis Wharton, added, "NAB stands ready to work with Congress on a balanced music-licensing proposal that promotes innovation and recognizes the benefit of our free locally focused platform to the benefit of artists and listeners." 

According to a statement from Jerrold Nadler, the Fair Play Fair Pay Act would: 
- Create a terrestrial performance right so that AM/FM radio competes on equal footing with its Internet and satellite competitors who already pay performance royalties. This would resolve the decades old struggle for performance rights and ensure that – for the first time – music creators would have the right to fair pay when their performances are broadcast on AM/FM radio.

- Bring true platform parity to radio – so that all forms of radio, regardless of the technology they use – pay fair market value for music performances. This levels the playing field and ends the unfair and illogical distortions caused by the different royalty standards that exist today. - Ensure terrestrial royalties are affordable capping royalties for stations with less than $1 million in annual revenue at $500 per year (and at $100 a year for non-commercial stations), while protecting religious and incidental uses of music from having to pay any royalties at all. 
- Make a clear statement that pre-1972 recordings have value and those who are profiting from them must pay appropriate royalties for their use, while we closely monitor the litigation developments on this issue.
- Protect songwriters and publishers by clearly stating that nothing in this bill can be used to lower songwriting royalties. 
- Codify industry practices streamlining the allocation of royalty payments to music producers.
- Ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license.