Radio’s New Royalties

After 50 years the artists now have the law on their side.

If approved, the Performance Rights Act, which was introduced on December 18th, would undo a decades-old exemption and force broadcasters to pay record labels and performers royalties when their music is played on AM and FM radio.

A bipartisan group made up of Sens. Patrick Leahy and Orrin Hatch and Reps. Howard Berman and Darrell Issa sponsored the bill following lobbying efforts by groups like the musicFIRST Coalition, which was founded by more than 100 artists and music and recording interest groups.

The current law in place, the Digital Millenium Copyright Act, only requires that radio compensate songwriters and composers in exchange for playing their songs. The exemption left artists and labels out because radio airplay has been considered a fair trade – while radio got the music, the labels used the exposure over the airwaves as free advertising to get listeners into record stores.

One thing the music industry is not doing is selling more records, as CD sales continue to plummet year after year. Not only could the record industry use some extra bucks but since satellite and Web broadcasters have to pay for play, it follows that AM and FM radio should do the same.

"It’s just plain wrong for [terrestrial] radio to be allowed to build profitable businesses with growing revenues on the backs of artists and musicians without paying them fairly for it," Tom Waits, a founding member of the musicFIRST Coalition, told Reuters. "The bottom line here is that radio plays music to attract listeners and bring in advertising dollars."

The National Association of Broadcasters (NAB) released the following statement the day the legislation was introduced:

"After decades of Ebenezer Scrooge-like exploitation of countless artists, the RIAA and the foreign-owned record labels are singing a new holiday jingle to offset their failing business model. NAB will aggressively oppose this brazen attempt to force America’s hometown radio stations to subsidize companies that have profited enormously through the free promotion provided by radio airplay."

Clear Channel, needless to say, also wasn’t a big fan of the proposed legislation.

"Everyone knows the record labels receive a huge promotional benefit from having their music played on the radio. They essentially receive free advertising for their product, and now they want radio stations to pay them for the privilege. That’s just plain backwards, and the ironic thing is it will drive their customers to other entertainment sources," Clear Channel said in a statement to Reuters.

On their Web site, musicFIRST is urging its supporters to write to their elected officials in support of the Performance Rights Act.