local radio freedom act

In the last month, there have been two bills introduced in the US House of Representatives seeking to impose a performance royalty for sound recordings on broadcast radio stations in the US. The bill introduced yesterday, The PROMOTE Act (standing for the Performance Royalty Owners of Music Opportunity to Earn Act – whatever that may mean, can be found here), seems to have garnered more attention, perhaps as it was promoted by its principal sponsor, California Congressman Darrell Issa, as giving performing artists the right to decide whether or not their music is played by radio stations. In fact, it does not do that, instead merely setting up a royalty system similar to that in place for Internet radio operators, allowing broadcasters to play music only if they pay royalties on “identical” rates and terms as do webcasters.

The PROMOTE Act proposes to add to the Copyright Act’s Section 106 enumeration of the “exclusive rights” given to copyright holders a provision stating that sound recording copyright holders (for most popular releases, that is usually the record company) have the exclusive right to authorize the performance of recorded songs by broadcast radio stations. That is in addition to the existing right to authorize the playing of these songs by digital audio transmissions (e.g. webcasters, satellite radio and digital cable services). But, like with the right to play music by digital services, that right to prohibit the playing of recorded songs is not absolute. Instead, like for the digital services, through a proposed amendment to Section 114 of the Copyright Act, broadcasters will have the right to play the songs if they pay a royalty set by the proposed legislation at “rates and terms” “identical” to those paid by webcasters. Let’s look at these issues more closely.
Continue Reading New Congressional Attempts to Impose a Performance Royalty for Sound Recordings on Broadcast Radio, Including the PROMOTE Act – What Do They Provide?

We wrote yesterday about the introduction of a bill in the House and the Senate proposing to impose a performance royalty on broadcasters for the use of sound recordings on their over-the-air signals.  At that time, we did not have a copy of the bill itself, but were basing our post on press releases and a summary of the provisions of the bill that was available on Senator Leahy’s website.  We have been able to obtain copies of the bill titled the  "Performance Rights Act" – or actually of the "bills," as the House and Senate versions are slightly different.  Reading those bills, many of the questions that we had yesterday are answered, and some new questions are raised as to how this bill, if enacted, would affect radio broadcasters.

One question about which we wrote yesterday was whether these bills would require that any royalty be determined by the Copyright Royalty Board using a "willing buyer, willing seller" standard or the 801(b) standard that takes into account more than a simple economic analysis in determining the royalty.  The 801(b) standard is used for services in existence at the time of the adoption of the Digital Millennium Copyright Act (essentially cable audio and satellite radio) and evaluates not only the economics of the proposed royalty, but also factors including the interest of the public in the dissemination of copyrighted material and the disruption of the industry that could be caused by a high royalty.  In connection with the recent CRB decision on the satellite radio royalties, the potential disruption of the industry caused the CRB to reduce the royalty from what the Board had determined to be the reasonable marketplace value of the sound recordings (13% of gross revenues) to a figure rising from 6 to 8 % of gross revenues over the 5 year term of the royalty.  In the Internet radio proceeding, using the willing buyer, willing seller model, no such adjustment was made.

In these bills, the proposal is to use the willing buyer, willing seller standard for broadcasting.  For a service that has been around far longer than any other audio service, it would seem that a standard that assesses the impact of a royalty on the industry on which it is being imposed would be mandatory.  Who wants to disrupt an entire, well-established industry that has served the public for over 80 years?.  But such a reasonable term is not part of the proposal here.


Continue Reading More on the Broadcast Performance Royalty Bills