If lawmakers were looking for a sign of compromise in the decades-old fight over whether radio stations should pay a music royalty for on-air performances, a House hearing Wednesday showed the two sides remain far apart.
If anything, the disruption in the media landscape makes it an even more fraught time to undermine radio’s role, said National Association of Broadcasters President and CEO Curtis LeGeyt, suggesting such an abrupt change in law would be wholly inconsistent with Congress’ long-held approach to copyright policy — and devastating to the local service that Americans have come to depend on from radio.
“It has already proven extremely difficult for local broadcast stations to innovate online due to the burdensome costs,” LeGeyt said. “It would be devastating to add those additional royalties to the terrestrial airplay, when we are already generating such significant promotional value to artists.”
Urban One’s Cleveland General Manager Eddie Harrell told the House Judiciary Subcommittee that a changing marketplace has been “devasting” for stations that are struggling to stay open, pay bills and hire employees. “Enacting a performance fee would upset the enriching business relationship that local radio stations have with the recording industry, resulting in less music being played on the radio, therefore creating harm to listeners and consumers,” he testified.
But SoundExchange President Michael Huppe suggested radio is overplaying the risk it faces. “In the words of the great Mark Twain, I would say that the reports of radio’s demise are greatly exaggerated,” he told lawmakers, noting Nielsen data that 88% of all Americans listen to radio, and the industry had $15 billion in revenue last year.
“To put it bluntly, for over a century, AM/FM radio has been stealing the music,” Huppe said, suggesting under the proposal, many stations would pay as little as $1.37 a day in royalties.
While it may not sound like a lot of money to music executives, LeGeyt said, a lot of local broadcasters are operating on extremely tight margins as big tech continues to siphon away ad dollars. Based on precedent, the NAB estimates it will mean hundreds of millions of dollars in new costs for the industry. “You’re not going to see local service with those kinds of costs,” LeGeyt said.
The proposed American Music Fairness Act (H.R. 791/S.253) would require broadcast stations to pay royalties when they play music. The smallest operations, those with less than $100,000 in annual revenue, would pay $10 per year in on-air radio royalties. Those with $100,000 to $1.5 million in revenue would pay $100 per year if it is a public radio station and $500 if it is a commercial station. How much other stations would pay would be left up to the Copyright Royalty Board, with the bill requiring it to develop five-year licensing agreements between the music industry and radio.
‘Randy Loves Radio’
The music industry has pushed the adoption of a radio royalty for decades with the help of famous faces, arguing that even if radio provides promotional support for artists, many older acts that no longer tour or sell records benefit little when their music is played.
Country legend Randy Travis appeared at Wednesday’s hearing with his wife in support of a law change. He has been largely silenced due to a stroke, and speaking for the couple, Mary Travis said the royalties his music has generated is what they have counted on for survival and Randy’s long-term care.
“Randy loves radio, I want to get that straight. He loves radio and would never have been Randy Travis without the radio at that point in time. But that was 40 years ago,” she said. “It’s time to do right by the ones that created that sound, that melody, that emotion that keeps the listeners coming back and the advertisers buying into radio.”
Not The Same As Spotify
To the music industry, a radio royalty is a matter of fairness — if streaming services and SiriusXM pay artists for their music use, so should AM/FM.
Proponents of the law change argue that it would open $200 million to $300 million on royalties due American artists in overseas radio royalties. But LeGeyt said that comparison is also flawed, since no other country has the locally focused radio model as the U.S.
“This model is time tested and across our copyright and communications laws,” LeGeyt said. “There are special exemptions and special provisions that have been put in place to enable this locally focused service ensure that we are always on in times of emergency and ensure that we reach listeners who maybe can’t afford an expensive subscription service don’t have adequate broadband service. That is what local broadcast is serving.”