Music sales’ continued decline has forced performing artists and their record labels to look to radio as a potential new source of revenue — and they want Congress to help make it happen.
Monday morning, a group of politicians, musicians and music industry executives are expected to unveil a new bill that would force terrestrial radio stations to pay royalties to performing artists and record labels when playing their songs. Performing artists currently don’t get paid for traditional radio play, which has long been thought of as a promotional tool to drive music purchases rather than as a revenue stream itself. New digital music platforms such as Spotify and Pandora, however, are already paying royalties to performing artists. (Songwriters, who can’t make money through avenues such as touring and merchandising, are paid for radio play.)
In addition to targeting terrestrial radio, the new bill, sponsored by House Democrat Jerrold Nadler and dubbed the “Fair Play Fair Pay Act,” would also force Internet and satellite radio companies like Pandora and Sirius XM to pay royalties to performing artists on songs recorded before 1972, which are currently not protected by federal copyright law. It would additionally raise the royalty rates paid by satellite radio platforms like Sirius XM to be more in line with rates paid by Internet radio services such as Pandora.
“The bill is a comprehensive piece of legislation that attempts to address several inequities that exist in the copyright world today,” says Michael Huppe, CEO of SoundExchange, a non-profit established by the record labels to administer digital royalty payouts. “The overriding theme is leveling the playing field, treating everyone equally and making sure all creators are paid fair market value for their work whenever it’s used.”
Record industry revenue has been more than halved since its CD-era peak, dropping from $14.6 billion in 1999 to less than $7 billion in 2014, according to the Recording Industry Association of America. An increasing amount of the money that remains is coming from streaming services rather than purchases of individual songs and albums. Those factors could increase pressure on radio broadcasters to pay performers whose revenue is coming from fans accessing their music across myriad platforms rather than buying it outright.
“It seems to be inconsistent that the same recording rewards performers when it’s on the Internet but doesn’t when it’s on AM/FM radio,” says E. Michael Harrington, chair of the music business program at SAE Institute Nashville. “That inconsistency is really foolish.”
Despite the onslaught of new ways to listen to music, AM/FM radio still wields incredible clout, with 243 million Americans tuning in weekly. That massive audience means the medium is still the best way by far for artists to debut and promote new music, radio station advocates argue.
The National Association of Broadcasters, a powerful lobbying group for radio and television stations nationwide, has already expressed its disdain for the new legislation, rallying 147 representatives and 11 senators to oppose the new bill. “We think it would be potentially devastating to the economies of a lot of local radio, kill jobs and actually hurt artists in the long run because if you have fewer financial resources, you have less ability to expose new artists,” says Dennis Wharton, NAB’s executive vice president for communications.
Previous legislation aimed at forcing radio stations to pay performers, like the 2009 Performance Rights Act, went nowhere. Moreover, the fact that the new bill simultaneously burdens terrestrial radio, Pandora and Sirius XM through its different provisions could lead to widespread opposition from a variety of stakeholders. “I can’t see the whole thing working because of the divided interests,” says Harrington. SoundExchange’s Huppe, meanwhile, argues the bill isn’t overly ambitious, pointing to a recent U.S. Copyright Office report advocating performing artist royalties for terrestrial radio and for pre-1972 songs on Internet radio.
Sirius XM declined to comment on the bill. Dave Grimaldi, Pandora’s director of public affairs, said in a statement: “We welcome a thoughtful conversation regarding ideas that promote robust music ecosystem for all music-makers, as well as consumers.”
Even if this bill dies, changes are certainly coming to the way performing artists are compensated for their music in the future. Sirius XM has been found liable for copyright infringement in various states for its use of pre-1972 recordings by the band The Turtles. Meanwhile, broadcast radio giants like Clear Channel have been quietly brokering deals to pay performing artists royalties at individual record labels such as Big Machine, which represents Taylor Swift.
“It’s all about the listen, the stream, the hitting of the eardrum instead of the buying of the CD,” says Huppe. “That makes these issues even more critical because they’re now such a big part of the revenue stream.”