Broadcasters, Recording Industry Still at Odds Over Radio Royalties

Broadcasters and the recording industry remain at odds over a longstanding legislative debate about the prospect of performance royalty payments for radio airplay. Interviews with NAB and former Rep. Joe Crowley, D-N.Y., chairman of musicFIRST, a group that represents artists’ interests, highlighted the divide.

Broadcasters are open to negotiation, but the recording industry hasn’t come to the table, said NAB Senior Vice President-Communications Ann Marie Cumming. NAB backed a House resolution that has been reintroduced for years: In May, Reps. Steve Womack, R-Ark., and Kathy Castor, D-Fla., reintroduced the Local Radio Freedom Act, a resolution declaring Congress shouldn’t “impose any new performance fee, tax, royalty, or other charges that create economic hardships for locally-owned radio stations.” Sens. Martin Heinrich, D-N.M., and John Barrasso, R-Wyo., filed a companion resolution in the upper chamber.

The House resolution is nearing 180 co-sponsors. The same measure was introduced in the 116th Congress and the 115th Congress, gaining 227 co-sponsors both years. CEO Gordon Smith announced in June NAB’s opposition to a competing legislative proposal from Reps. Darrell Issa, R-Calif., and Ted Deutch, D-Fla. The American Music Fairness Act (see 2106240052) would levy a performance royalty on stations playing music on terrestrial radio. Issa “believes that this bill reflects both an updated approach in its design and solid bipartisan agreement,” his office said in a statement. “He thinks this is the right bill at the right time.”

"These stations are integral parts of our lives and economy, and it’s essential policy prioritizes safeguarding access to over-the-air-broadcasting services," Womack said in a statement, noting the growing bipartisan support for the Local Radio Freedom Act.

The goal is to pass legislation, Crowley told us: That’s the only way to unlock about $200 million in annual royalties for American artists, money that is tied up overseas because the U.S. is the only developed country in the world that doesn’t have reciprocity laws, he said: With a change in law, foreign countries can start to compensate American artists for radio airplay.

NAB contends musicians and local radio stations have shared a mutually beneficial relationship for decades, in which artists provide music and stations promote their work. Radio's “free promotion is worth more than $2.4 billion annually to record labels,” NAB contended. “Local radio continues to be the top source for listeners seeking new music, far surpassing other sources.”

“We support local radio,” said Crowley, acknowledging the promotion of local artists. “We’re focused on the large conglomerates that are raking in billions of dollars a year on a product that they exploit.” U.S. artists lose a substantial amount of money they should be collecting from foreign radio stations, said Free State Foundation Director-Policy Studies Seth Cooper, who recently wrote in support of the bill from Issa and Deutch. “That consideration should really drive the move toward reform,” he said. “It’s easy to focus on the revenues from the U.S. radio stations, but the exemption really magnifies the harm because of the lack of royalties from the foreign countries.”

“Contrary to their claims, the multinational, foreign-owned record labels have long collected royalties when American music is played abroad,” emailed Cumming. “Whether they share those royalties with their artists is ... worth asking.” She said “more sound recording performance royalty dollars” are collected annually in the U.S. than “any other country in the world and many of the most lucrative foreign music markets have already begun the process of making royalties available to American artists.”

The American Music Fairness Act should be reported out of the House Judiciary Committee, but it’s doubtful it will get a floor vote, one media industry lobbyist said, citing overwhelming sponsorship for the competing House resolution. “It’s just a rehash of the conversation we continue to have every Congress,” he said.

Offices for Deutch and Castor didn’t comment. The Local Radio Freedom Act would reaffirm Congress' “support for local radio stations and opposes new fees or taxes on local, free, broadcast radio which could jeopardize those very services upon which so many rely,” Castor said when reintroducing the resolution. Issa spoke in support of the American Music Fairness Act, noting small and local radio stations could play unlimited music for less than $2 per day.