Radio Performance Royalty Exclusion Meets Hill Skepticism
Broadcasters’ desire to avoid paying royalties to musicians for airing their songs met with skepticism from many members of the House Intellectual Property Subcommittee at a 3-hour hearing Tuesday punctuated by singing by Judy Collins. Testifying for NAB, ICBC Broadcast Holdings President Charles Warfield was asked by several members to describe what makes his industry different from webcasters, satellite radio and cable radio. Those industries pay performance royalties, but Warfield said extending them to broadcasters would amount to a tax. “Some people look at this as a wealth transfer that goes to very successful record companies,” said Warfield. “Compensation to the record labels and artists is provided under the current system,” he said, calling efforts at change “misguided.”
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Democratic Reps. Sheila Jackson Lee of Texas and Hank Johnson from Georgia took issue with Warfield for calling royalties a tax. Jackson Lee said broadcasters don’t use that term for royalties they pay to composers, which Warfield pegged at $450 million a year. “I can’t really agree that there is such a benefit to performers that one is a tax and one is a royalty,” she told Warfield. Johnson’s comments were more pointed. “My hair’s been rubbed the wrong way when I hear the term performance tax,” said Johnson. “Broadcasters would not be paying revenues to a governmental entity. It would simply be paid to a performer on a sound performance. Why is it that you persist in using the term ‘performance tax'?”
Warfield said musicians get millions of dollars’ worth of free publicity when songs air, promoting album sales. The current royalty system has applied for decades, and changing it makes no sense, he added. “We as broadcasters support the most lucrative and most successful recording industry in the world,” he said, describing it as larger than the music business in France, U.K., Australia, Spain and Mexico combined. Some small broadcasters would go out of business if they had to pay performance royalties, and others would switch to non-music formats and some might raise advertising rates to offset higher costs, he said.
Register of Copyrights Marybeth Peters didn’t seem swayed by Warfield’s arguments. She said it’s high time for the industry to pay performance royalties, as it does in most other countries, and Congress could impose such a system without hurting radio. Online piracy and other ways for people to get music without paying for it have undermined “the careful balance that Congress struck” by excluding broadcasters, Peters testified. “Broadcasting is clearly a threat as well as a benefit” to musicians, she said. Peters added that she was “extremely troubled and disappointed” by the industry’s effort to frame royalties as a tax. Broadcasters’ “political clout” let them avoid paying performance royalties, Peters said.
Several legislators said they wanted to ensure that small stations won’t be hurt by performance royalties. They included subcommittee Chairman Howard Berman, D-Calif. Peters said a new royalty system could ensure “that small broadcasters survive” through “carefully structured legislation.” Some hearing participants pointed to Canada, where royalty rates take into account a station’s size and how much airtime it devotes to music.
Though there may have been a time when radio exposure was enough to compensate musicians, that time has passed, said Rep. John Conyers, D-Mich. “I think we can work out some kind of compensation package, Chairman Berman, without harming the songwriter,” he said. Republicans including Reps. Darrell Issa of California and Bob Goodlatte of Virginia seemed to lean toward imposing a broadcast performance royalty. “It’s been made clear that the status quo will no longer be acceptable,” Issa said. “Broadcasters are on notice that we intend to look at a reorganization.” Rep. Ric Keller, R-Fla., said he was “open-minded” on the issue. He suggested that others aren’t neutral, saying “it seems to me that the radio stations are a bit underappreciated here.”