In a pre-Christmas surprise that most broadcasters could do without, identical bills were introduced in Congress on Tuesday proposing to impose a performance royalty on the use of sound recordings by terrestrial radio stations. Currently, broadcasters pay only for the right to use the composition (to ASCAP, BMI and SESAC) and do not pay for the use of sound recordings in their over-the-air operations of the actual recording. This long-expected bill (see our coverage of the Congressional hearing this summer where the bill was discussed) will no doubt fuel new debate over the need and justification for this new fee, 50% of which would go to the copyright holder of the sound recording (usually the record label) and 50% to the artists (45% to the featured artist and 5% to background musicians). The proponents of the bill have contended that it is necessary to achieve fairness, as digital music services pay such a fee. To ease the shock of the transition, the bill proposes flat fees for small and noncommercial broadcasters – fees which themselves undercut the notion of fairness, as they are far lower than fees for comparable digital services.
While, at the time that this post was written, a complete text of the decision does not seem to be online, a summary can be found on the website of Senator Leahy, one of the bills cosponsors. The summary states that commercial radio stations with revenues of less than $1.25 million (supposedly over 70% of all radio stations) would pay a flat $5000 per station fee. Noncommercial stations would pay a flat $1000 annual fee. The bill also suggests that the fee not affect the amount paid to composers under current rules – so it would be one that would be absorbed by the broadcaster.