Watt Bill Would Require Broadcasters to Pay Performance Royalties
Terrestrial radio stations would have to pay performance royalties under a bill by House Judiciary Intellectual Property Subcommittee ranking member Mel Watt, D-N.C., introduced Monday. It was met with applause from artists’ rights groups such as the musicFIRST coalition and the American Association of Independent Music (A2IM), but NAB criticized the legislation as harmful to local broadcasters. The bill follows July comments from Watt previewing a bill that he had said would “incentivize the parties to negotiate in good faith,” and that would be introduced by early August.
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Current legislative debate on performance royalty rates is at a “stalemate,” Watt said in a statement Monday, so he proposed a solution he hopes will satisfy both sides: The market would decide the royalty rate, as broadcasters called for. “But it also provides equal rights and bargaining power to both sides by allowing recording artists to reject offers they find unacceptable -- something they currently cannot do under the copyright laws because the compulsory license requires them to make their music available.” To do that, the bill repeals the existing compulsory license. The bill does, however, allow broadcasters and rightsholders to use the performance royalty collection society SoundExchange as an agent to collectively negotiate a one-stop licensing rate available to all, an aspect of compulsory licensing broadcasters have said should remain preserved.
"The failure of terrestrial broadcasters to compensate the vocalists, musicians, and background performers sets the U.S. apart from most industrialized nations where performers are compensated for their performances,” Watt said in a statement. “As a result of this lack of reciprocity, royalties collected internationally for over-the-air performances are not available to American sound recording artists.” He said direct licensing deals like those Clear Channel has with several record labels “expose the unfairness and inadequacy of the current system and they strongly point out the need for a legislative solution that will apply market wide.” He also said the lack of a radio performance royalty gives those stations an “unfair advantage” over digital radio services. “The solution to all these problems is for everyone to pay and for all royalties to be set under the same fair-market standard,” he said. Watt has sponsored similar legislation since 2009, when the Performance Rights Act was approved by the House Judiciary Committee.
But the bill would “negatively impact” local radio stations, said NAB spokesman Dennis Wharton in a statement Friday. “NAB believes market-based negotiations like the recent Warner Music-Clear Channel accord demonstrate that this issue is already being addressed in the free market,” he said. “This legislation would impose new costs on broadcasters that jeopardize the future of our free over-the-air service.” He pointed instead to an NAB-supported resolution, the Local Radio Freedom Act, that has 183 congressional supporters and would oppose “any new performance fee, tax, royalty, or other charge” on local broadcasters.
Watt’s bill received support from artists’ rights groups. “American artists miss out on millions of dollars in royalties owed even at a time where U.S. competitiveness in exports is such a big deal,” said Casey Rae, interim executive director of the Future of Music Coalition. “Radio giants like Clear Channel say that private deals will solve the problem, but these deals don’t ensure fair compensation to artists, nor do they get artists paid for international plays,” he told us, saying Watt’s bill would reanimate that discussion. “It’s not entirely clear whether bypassing the compulsory rate-setting process will give more market confidence, but the fact that the bill lays out direct and equitable payment for artists is to be commended."
"Rather than providing a substitute for legislation, as some have suggested, the Clear Channel private deals appear to have inspired it,” said musicFIRST Coalition Executive Director Ted Kalo, who has supported required royalty rates for broadcasters. He said in a statement the bill signals “increasing momentum” for a right to fair pay for music creators. “After saying no to each and every approach to date, the broadcasters have run out of excuses,” he said. “Critically, for artists, it preserves protections in current law, including direct payment, the current 50 percent royalty share, and designated money for non-featured artists.” Kalo, whose coalition has been critical of efforts to reduce royalties for Internet radio companies, also lauded the bill for facilitating “free market negotiations,” which would give webcasters the “fair market price” they have lobbied Congress for. A2IM President Rich Bengloff said the bill compensates artists for “reciprocal royalty payments from overseas” to which artists are entitled but do not currently receive when recordings are played abroad.