Tag: American Music Fairness Act

The American Music Fairness Act Gets a New Hearing

American Music Fairness Act

Tomorrow afternoon, the House Judiciary Committee IP Subcommittee will hold a hearing entitled Radio, Music, and Copyrights: 100 Years of Inequity for Recording Artists. The subject of the hearing is—at least ostensibly—to compare and contrast the royalty granting American Radio Fairness Act (AMFA) against the royalty denying Local Radio Freedom Act (LRFA). Witnesses to testify include recording artist Randy Travis; National Association of Broadcasters (NAB) president and CEO Curtis LeGeyt; SoundExchange president and CEO Michael Huppe; and Urban One Regional VP and General Manager Eddie Harrell, Jr.

As discussed in other posts, AMFA would, for the first time since radio was invented, require terrestrial stations to pay royalties to the artists whose sound recordings draw audiences and drive ad revenues. The United States is the only major radio market in the world that does not pay royalties to recording artists, and as a result, American artists are likewise not paid royalties when foreign radio stations play their music. And the only reason this unfairness has persisted is the lobbying power of NAB.

When AMFA was introduced in 2021 by Reps. Ted Deutch and Darrell Issa, the latter stated in a Capitol Hill press conference, “The broadcasters have become experts in muddying the waters.” Indeed. As we often see with the behemoths of Silicon Valley, the NAB is very adept at using the “little guy” to obfuscate and maintain the status quo of multi-billion-dollar advertising conglomerates that would rather not share even a fraction of revenue generated by the music they play. And although Mr. Travis is a star, the Subcommittee must remember that many of the beneficiaries of AMFA would be “little guys,” including studio musicians, producers, and engineers.

Granted none of the witnesses testifying tomorrow are “little guys,” though the presence of Mr. Harrell representing Urban One is interesting because I am hopeful that he does not conflate Black-owned with small. As the media conglomerate’s website states, “For more than 40 years, Urban One has been the leading voice speaking to Black America. First, as the largest local urban radio network. Then, as the largest syndicator of urban programming.”

Note the word largest appearing twice in two short sentences. And good for Urban One. They should be proud of their scope, reach, depth, and diversity of programming. But if Mr. Harrell testifies that Urban One cannot afford to pay royalties to musical artists—or worse, implies that AMFA would harm Black enterprise in media—that’s a moment to raise a skeptical eyebrow. And not just because more than a few of the musical artists drawing audiences to Urban One’s stations are also Black. As the company’s 2022 annual report states…

While a core source of our revenue has historically been and remains the sale of local and national advertising for broadcast on our radio stations, our strategy is to operate the premier multi-media entertainment and information content platform targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties.

I wouldn’t want to take on new expenses either. But Urban One is a media giant looking to become a bigger media giant complete with television networks and, most notably, development of new and original content with licensing value. Content creators denying other content creators a fair deal is not a great look. As the above statement from the report makes clear, broadcast advertising remains foundational to the business, and the Subcommittee should not lose sight of the fact that musical artists continue to underwrite that revenue without any say or compensation in the arrangement.

Local Radio Freedom Act is the Missing the Fairness

As to actual little guys, while large broadcasters like Urban One would be subject to rates set by the Copyright Royalty Judges, the statutory “small broadcaster protections” of the AMFA should be sufficient to reject the central premise of the LRFA sponsored by Senators Hassan and Barrasso. On Sen. Hassan’s web page, NAB’s LeGeyt is quoted thus: “A new job-crushing performance fee on local radio stations would hurt stations’ ability to provide their free, essential service in communities across the country.”

In addition to the too-cute-by-half contrasting “freedom” against “fairness,” the LRFA simply ignores the fact that small, independent stations would pay fees that would not qualify as job affecting, let alone “job crushing.” A non-public, independent station with revenue between $100k and $1.5mm would pay $500/year; a public station with the same revenue range would pay $100/year; and a station with revenue under $100k would pay $10/year. Specifically, 72% of the 220 Black-owned radio stations (as of October 2021) generate less than $1mm in annual revenue and would be capped at the $500 annual fee.

Yet, despite these facts, the language of the LRFA is so replete with worn-out rationales for the status quo that it’s hard not to assume the NAB wrote every word of the bill. For instance, this one is rather long in the tooth:

Whereas local radio stations provide free publicity and promotion to the recording industry and performers of music in the form of radio airplay, interviews with performers, introduction of new performers, concert promotions, and publicity that promotes the sale of music, concert tickets, ring tones, music videos, and associated merchandise.

The “free publicity” argument was weak 20+ years ago, but today it is simply unsupportable. The Subcommittee knows, or should know, that music discovery occurs in a complex landscape that includes every platform from traditional radio to Instagram. The broadcaster cannot reasonably claim that, in general, they provide more value by promoting music than that music provides them value by drawing listeners. Speaking anecdotally, what is the frequency of remaining tuned to a radio stations playing music one already likes versus waiting to discover something new?

Nevertheless, AMFA includes a provision under which the royalty judges may consider “whether use of the station’s service may substitute for or may promote the sales of phonorecords or otherwise may interfere with or may enhance the sound recording copyright owner’s other streams of revenue from the copyright owner’s sound recordings.” Thus, where a station can provide some evidence to support the “promotion” argument, that can be taken into account when calculating the royalty payment. But this would require the broadcasters to put their money where their rhetoric is—and nobody can blame them for not wanting to put their money anywhere they don’t have to. But that doesn’t make it fair. “100 years of inequity” is right. It’s long past time to make it wrong.

Is Congress Protecting Big Radio and Forgetting Musicians—Again?

Cars and music are so symbiotic that many contemporary vehicles could be mistaken for high-tech sound systems that also happen to take us places. I remember when popular music was only available on AM radio stations, and we’d listen to Steve Miller or Wings or the Jackson 5 playing through tiny, sibilant speakers mounted in the center of the dashboard. Those days are LONG gone, of course, and although AM radio is a relic as a music platform, musical artists might want to tune into the legislative progress of the AM Radio in Every Vehicle Act because it just might leave them hitchhiking on a lonely highway. Again.

Introduced in May by Senator Edward Markey, along with an identical bill in the House sponsored by Representative Josh Gottheimer, the AM Radio legislation was presumably drafted at the request of the major broadcasters seeking to extend the lifespan of terrestrial radio in a market increasingly dominated by digital options. Specifically, the bills are a response to auto manufacturers who have discontinued, or plan to discontinue, production of new vehicle sound systems capable of receiving AM signals. Likewise, makers of electric vehicles (EVs) have shunned AM because the powertrains cause electromagnetic interference at those frequencies.

More broadly, Autoweek, in November 2022, stated, “Auto companies consider deep-sixing radio for the same reason they ditched the CD player—it costs money and takes up space and resources on the valuable digital dashboard.” While some automakers testified in hearings that Congress should not dictate their product decisions in a changing market, others have since agreed to keep AM radio for now. Admittedly, it does seem as though forcing auto manufacturers to carry the AM signal in all cars in 2023 is a bit like requiring computers to still come with floppy drives.

Meanwhile, it is not hard to imagine how today’s AM Radio mandate, if passed, could serve as a precedent for an FM requirement in the future. And this would be acutely relevant to musical artists because it would extend the lifespan of terrestrial music broadcast, for which performers receive no royalties.

Section 106(6) of the Copyright Act protects the right to publicly perform sound recordings by digital transmission only, and recording artists have been trying for decades to amend the law to include terrestrial radio, arguing that they have long deserved a share of ad revenue earned by stations playing their music. Every time the issue has come before Congress, lawmakers have sided with the broadcasters, but in June 2021, the American Music Fairness Act (AMFA) came closer to gaining approval than the broadcasters might have expected. Reps. Ted Deutch and Darrell Issa stood on Capitol Hill among a group of performing artists, including Dionne Warwick and Sam Moore, to announce AMFA, and as Rep. Issa told reporters that day, the longstanding rule of “not one penny” is a bad faith arrangement that needs to be made right.

The United States is unique among major markets for its failure to pay royalties to musical artists for traditional (terrestrial) radio play, and this despite billions in ad revenue that simply would not exist without the music. Additionally, because U.S. radio does not pay royalties to any artists, American performers are typically excluded from royalty opportunities in foreign markets as well as at home. Thus, it could feel like an all too familiar gut punch if Congress were to swiftly pass AM Radio in Every Vehicle without passing the American Music Fairness Act (AMFA) at the same time.  

Although terrestrial radio may be shrinking—slowly crossfading to digital platforms—there is clearly enough terrestrial broadcast that iHeart, Cumulus, et al. are willing to fight the passage of AMFA to avoid paying musical artists a fraction of their billions in annual ad revenue. And as if it were not obvious that the local radio station is as rare today as the local newspaper, NAB does not hesitate to play the small-station victim card in opposition to Music Fairness. In a December 2022 statement thanking House committee members for voting against AMFA, NAB writes:

The American Music Fairness Act would mandate a new performance royalty on free, local radio stations that would jeopardize local jobs, prevent new artists from breaking into the recording business and harm the hundreds of millions of Americans who rely on local radio.

Of course, NAB omits the fact that AMFA establishes fees as low as $10/year for truly small operators, just as they omit the fact that, for instance, over 800 “small” stations in the U.S. are owned by one mega-corporation called iHeart. As for “preventing new artists from breaking in,” that’s a specious claim. Music is the only reason anyone tunes into certain radio stations, and if a station fails to play what someone wants to hear, the station will lose the listener not the artist. Because in case National Association of Broadcasters missed the memo, music discovery for the two youngest generations happens on a whole bunch of platforms that ain’t radio. 

In a September 7 statement, NAB praised the 150 House cosponsors of the AM Radio bill, stating, “The incredible bipartisan support the AM Radio for Every Vehicle Act has garnered in just a short time is a testament to the integral role AM broadcasting plays in informing, entertaining and connecting Americans across the country.” Perhaps. But frankly, the bills offer so much political cover—from playing a role in the Emergency Alert System to allegedly protecting conservative talk shows—that it’s possible few Americans will care whether Congress may be handing a gift to Big Radio.

But if AM Radio in Every Vehicle does become law, it will be hard to ignore the faint aroma of protectionism for an industry that needs no protection. Meanwhile, the musical artists, including background performers you’ve heard but never heard of, could use a little support from their representatives and finally receive a fair share of revenue from the market they made possible in the first place. If Congress is determined to suddenly mandate more terrestrial radio in vehicles, then it should also decide to finally protect the musicians who are often the only reason we enjoy the ride.  

Photo by: CelsoDiniz

Has the Moment Finally Arrived for Fairness to Music Performers?

Unlike the rest of the developed world, American radio broadcasters are unique in that they pay nothing in performers’ royalties when they play music on their stations. Although this has been true since radio began in the U.S., many Americans are surprised to learn that this is the case and, according to polling, believe it’s unfair. That’s because it is unfair.

Songwriters receive royalties for terrestrial radio play but not recording artists and their labels, which also excludes producers, engineers, and studio musicians. Almost since the day the National Association of Broadcasters (NAB) was formed in 1922, the station owners have successfully lobbied against a public performance right in sound recordings via broadcast by arguing that the promotional value radio play provides to the recording industry overwhelms the rationale for paying to license the music.

“But that was never a legitimate excuse,” said Congressman Ted Deutch in front of the Capitol yesterday afternoon when he introduced the American Music Fairness Act, co-sponsored by Congressman Darrell Issa. “The broadcasters have become experts in muddying the waters,” Deutch continued as a group of musicians in the background, including Dionne Warwick, Sam Moore, Ken Casey of the Dropkick Murphys, and Blake Morgan, all nodded in recognition that this has been a decades-long fight for basic fairness. As Rep. Issa noted in response to one reporter’s question, Congress will not be negotiating the terms to establish equity with the major broadcasters—this will be done under the auspices of the Copyright Office—but he emphasized that the longstanding rule of “not one penny” is a bad faith arrangement that needs to be made right.

Six major media conglomerates own more than 2,000 terrestrial radio stations in the United States, and the revenues from radio advertising totals in the hundreds of billions of dollars. And nobody is confused about the fact that without music to play, most of those stations would not have the audiences needed to attract those advertisers. If American radio stations ever did provide enough promotional value to justify not paying for public performances of the recordings—and the relationship between radio and record sales is both questionable and scattershot at best—that argument is even weaker in the 21st century market, when the prospect of selling copies or downloads is less likely than in prior decades.

At this point, while the pundits and the gurus keep spinning theories about “music discovery” (i.e. exposure) as an excuse to avoid paying creative people in many fields, the only clear observation we can make in this instance is that terrestrial radio is just one of several means by which we still listen to music. And the music is the ONLY reason we hear the advertisements that generate all the money in that industry. Surely, there can be no rationale for allowing entities like iHeartRadio, Cumulus, et al to keep paying nothing to the performers on whom they so profoundly depend.

Moreover, Rep. Issa explained that not only does America’s uniqueness in this regard deny royalties to both American and foreign artists in the American radio market, but it also denies royalties from foreign radio stations to American artists due to reciprocity. Because our radio stations don’t pay their artists, their radio stations don’t pay ours, which is rather extraordinary when we consider the amount of music the United States exports worldwide.

The AMFA is narrowly tailored to avoid imposing undue burdens on small, independent, and public radio stations through fixed, statutory rates for entities earning less than $1.5 million. For instance, a station earning $100,000 pays $10/year. Upon adoption of the bill, the larger entities will negotiate royalty arrangements with labels and other artist-representing stakeholders. But probably not without a fight by the broadcasters over passage of the bill itself.

The broadcasters have enjoyed a free ride for a very long time, and perhaps they will once again throw more money than the average musician ever earns at an effort to maintain the status quo. But on the other hand, maybe they’ll see the writing on the wall this time. Because at least when it comes to artists’ rights, many Members of Congress seem to have more finely tuned their bullshit detectors in recent years. And one upside of the of the fact that the broadcasters have successfully squashed the performers’ rights for so many years, is that every argument they can present, has already been made hundreds of times.

… no one would argue with the fact that the promotion which records receive from broadcast exposure boosts record sales and attendance at performers’ concerts. This promotion is more than adequate compensation for the broadcast performance. The undeniable truth is that many recording companies and artists would be forced out of business overnight if broadcasters stopped playing their records over the air.

That was in a letter submitted on behalf of the North Carolina Broadcasters to the Copyright Office in 1978. And what little purchase on reality the argument had then has long since eroded as a foothold in the contemporary market. Time to play fair and give the musicians a little cut of the revenue their work generates. Because without the music, nearly all the radio stations would be forced out of business overnight.

Photo by hurricanehank