Broadcast Law Blog

The battle over performance royalties for broadcast stations seems to have been officially joined. We wrote last week about the rumors of a coalition of record companies and musicians that was reportedly forming to lobby Congress to enact a performance royalty on broadcast radio for the use of sound recordings, and the NAB’s immediate reaction, writing a letter to Congress to oppose the new royalty. Now, the press reports that the pro-royalty group has responded with their own letter to every Congressman, asking that immediate action take place to impose the royalty. Two letters in one week indicate that this summer may be a hot one for broadcasters on Capitol Hill.

The royalty being discussed would be one new to broadcast radio in the United States, but one well known to non-broadcast digital music providers such as Internet radio – as it is the same royalty that has been the subject of so much controversy since the Copyright Royalty Board released its Internet radio royalty decision in early March, more than doubling between 2005 and 2010 the royalty that those stations pay for the use of sound recordings. The royalty on the use of sound recordings (the song as recorded by a particular artist) is in addition to the royalties that are paid to ASCAP, BMI and SESAC for the underlying musical composition. So, if imposed, this would be a new royalty for US terrestrial broadcasters.

Recently, the radio industry has been fighting the perception that it is an industry with declining growth and increasing competition, leading some publicly owned radio companies into stock doldrums as investors seek sexier investments. If a performance royalty was added to the costs of operating terrestrial radio stations, what impact would that have on the performance of these companies? And, for some of the smaller stations in big markets, or ones serving very small rural markets, how would another hit to the bottom line be handled, especially if it were a significant one (like the one that was just imposed on Internet radio)? It could be a real concern – one that all broadcasters will want to vigorously oppose.

Someone might want to remind Congress that adding more costs to the operation of smaller stations simply drives them into the hands of consolidators.

I am an Internet DJ I was also a Terrestrial DJ, The PErformace Fee is unlawful as I can tell as it is a Double Tax situation. Isn't it against the law to Double tax?

Unfortunately, this seems to me, at least, to be a product of the NAB and broadcast companies not taking enough interest in and aggressively lobbying for better and more fair copyright legislation over the past 9-12 years going back to the original pieces of legislation in 1995 and 1998 that originally created the performance royalty for digital distribution of content. By only being concerned with their existing distribution model at the time, they opened the door to creating an underlying and pervasive attitude towards increasing copyright royalties that has now, once again, come back to infringe on even their core business models. One can only hope that their current effort will spill over into an even more aggressive push towards a complete overhaul of the Digital Millenium Copyright Act - although I, for one, will not be holding my breath.

Many people seem to forget that there are numerous other businesses beyond over-the-air radio in which the performance of sound recordings is a core component of their business. For instance dance clubs, skating rinks, and mobile DJs depend entirely on music -- and yet are all exempt from paying performance royalties to SRCOs and recording artists.

If we truly want to level the playing field, then the U.S. should finally adopt a broad performance right in sound recordings like that of the rest of the industrialized world. Let's stop with these patchwork solutions. Any and all businesses that commercially exploit sound recordings in the fashion of a "public performance" (whether via an analog or digital broadcast transmission or at the location of origin) should necessarily remunerate the creators of those same artistic works.

Seriously, is the recording industry trying to shoot itself in the foot when they finally have the opportunity to fix the Copyright Act once and for all?

I would agree that there are facets of performance rights that carry far beyond terrestrial broadcasters. Entities such as clubs, djs, etc. are using the performance of the music to benefit their business-- and while one could easily point out that radio stations are profitable as well, songs would simply be unknown if radio did not play them. The rise if iTunes music store and similar has to an extent given consumers the chance to find their own artists, but take a look at the top 10 on any given day- it closely mirrors the top songs on radio charts. There is a definite symbiotic relationship between performance right holders and terrestrial broadast (I would argue internet broadcast as well, although the current opinion is clearly not in that mindset).