Sometimes legislation changes an entire business model, even one that has been set in place for nearly a century. While the music industry has been going through such changes due to both technology advancements and the legislation that has tried to keep up with them, the terrestrial radio business, although tangential to the music industry, has enjoyed its business model without much interruption. This all might change with the Performance Right Act (H.R. 848), which is slowly making its way through Washington.
As the music industry players that represent artists and performers will tell you, these rights are a long time coming. 80 years+, to be sure. That is how long terrestrial radio has been playing copyrighted music without paying a single performance right royalty to recording artists and copyright owners. The songwriter, on the other hand, is compensated. The nonpayment of royalties to the recording artist or copyright ower is, quite frankly, a loophole in the current legislation.
The Performance Right Act (H.R. 848) is the latest push by recording artists and copyright owners to “get paid when [they] get played.” SoundExchange, the performance right engine for this constituency in the music industry has lobbied hard for this Act to pass. A small milestone was passed on October 15th, when the Senate passed the Senate version of the bill, S. 379, in a voice vote. It is no surprise that Orrin Hatch is the floor’s leader for this bill. He has always been a progressive voice in Washington for the music industry.
The debate about whether this performance right is a “tax” on terrestrial radio, or whether it is a “royalty” owed to recording artists and copyright owners for using their property, has turned into somewhat of a lopsided argument. There was a day when terrestrial radio had no competitors. FM and AM radio played all the music they wanted, and these avenues to the public were viewed as the only way to make it big. Therefore, waiving this payment in return for the free marketing was not so bad. Today, however, FM and AM have competitors - satellite radio, cable radio, and others. These competitors pay recording artists and copyright owners a performance right royalty, leaving FM and AM radio with little room to argue they shouldn’t have to anymore.
Terrestrial radio stations make the argument that this royalty would put many small and minority-owned radio stations out of business. While this argument seems to be the only sensible one this side has, the Performance Right Act includes a sliding scale for low-revenue and minority-owned stations, allowing them to stay on their feet. Some college and education-based stations would pay no more than $80/month.