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.
