NAB Joint Chair Charles Warfield, second from left, senior adviser to YMF Media, tells lawmakers at a House judiciary meeting that radio airplay is valuable and that the attendant station promotion helps artists, both new and old. Courtesy NAB.
WASHINGTON — “Getting you all together and getting on one page will probably happen two days after the sun rises in the west.”
So said Wisconsin Republican Jim Sensenbrenner after a House Judiciary subcommittee hearing on radio music licensing. Several of the nine witnesses who appeared before lawmakers in late June complained that the complex licensing system is broken but the group offered no common ground on how to fix it.
“I’m seeing all of you wanting a level playing field, yet keeping the advantages you have,” said California Republican Darrell Issa.
Observers told national news outlets afterwards that the chances of Congress passing music copyright reform this session are slim. Lawmakers themselves predicted during the hearing that, even if they could get everyone together in one room to come to a compromise, no one would be entirely happy.
Several issues make up the music licensing debate in Washington, such as the lack of federal copyright royalties for music recorded before 1972. (Such music is covered, if at all, by state law.) Pandora is trying to convince the Copyright Royalty Board to reduce its royalties. BMI and ASCAP want the Justice Department to update their decades-old consent decrees on music licensing.
“We’re locked into a [copyright] model that might have been appropriate when the Beatles came to America, but not now,” said BMI CEO Michael O’Neil at an earlier hearing on the topic. BMI seeks to replace the current copyright rate court with an arbitration model and believes consent decrees should sunset when their basis no longer exists.
An important and ongoing issue in the debate is that terrestrial radio pays royalties for songwriters, but not for the recordings they air. Performers, and their labels, want to end that exemption; broadcasters want to retain the exemption for multiple reasons.
The debate takes place as the music business has seen physical music sales decline amid the advent of downloads, streaming and on-demand music. ASCAP President Paul Williams, himself a singer and songwriter, explained the dilemma: “People don’t want to own their music any more; they want to stream it.”
Representatives of record labels, broadcasters and digital streaming companies discussed the patchwork of laws and regulation underlying the music business and the resulting disparities. In a nearly three-hour hearing on possible changes to federal copyright law regarding music licensing, lawmakers repeatedly asked the nine witnesses what they would like reform to look like.
There was some agreement on closing the loophole that denies artists performance royalties for pre-1972 recordings, though not on much else.
Indeed, Pennsylvania Republican Tom Marino called current music royalty schemes, which differ depending on which platforms play the music, “confusing and complex.” He asked the witnesses to “think about sitting down with us as a group.” Crafting reform legislation “is a monumental task, but we will attempt it.”
Louisiana Democrat Cedric Richmond went further, saying, “If we solve this problem, you’re probably not going to like it and it’s probably going to be wrong. But you all should be in the room.”
Some of the material presented was a repeat from a hearing on the topic in early June, when recording industry representatives said ASCAP sees 9 cents for every 1,000 streams on Pandora.
SoundExchange President/Chief Ex-ecutive Officer Michael Huppe gave lawmakers an example of how music copyrights are treated by platform now. SoundExchange collects and distributes digital performance royalties to artists and copyright holders including record companies.
When a consumer listens to a song by hearing witness Roseanne Cash, streamed over a cellphone, that generates between an eighth to a quarter of a penny per stream in royalties, Huppe said. The same song aired over SiriusXM, which is governed by a different rate, “would pay about 9.5 cents across streams.” And if aired on AM/FM radio, there is no performance royalty. Each one of those is governed by different rules. That’s “just not right,” said Huppe.
The recording industry says it wants a level playing field, closing loopholes that it believes no longer make sense. Representatives repeatedly hammered home the fact that radio doesn’t pay a performance royalty. SiriusXM believes that should change as well.
Radio Music Licensing Chairman Ed Christian said levying another royalty on terrestrial radio “would cripple a radio industry that has been financially treading water for years now.”
“The radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital strategy,” said Christian, who’s the president and chief executive officer of Saga Communications.
NAB Joint Board Chair Charles Warfield, who is senior advisor to YMF Media, argued that radio airplay is valuable and the attendant station promotion helps artists, both new and old. He said terrestrial radio does pay royalties to music publishers ASCAP, BMI and SESAC.
Warfield said even with its financial difficulties, radio has supported artists and helped develop careers, “in many cases, even when they’re not supported by their record labels.” Whether they choose to tour, artists have the opportunity to do so, he said.
Asked about radio’s promotional value, Cash said, “I’d rather have control of my copyrights.” She also lamented the lack of royalties for music recorded before 1972. “It’s heartbreaking” to see artists from an earlier generation feel compelled to go on the road and tour to make up money they’ve lost, she said.
Streaming’s lack of a viable business model was discussed. Pandora Vice President of Business Affairs Chris Harrison said the company pays more in streaming than do competitors SiriusXM or terrestrial radio, and the audio company is trying to persuade the Copyright Royalty Board to lower its rate. Harrison said by this summer, the company is on its way to passing a total to date of $1 billion in royalties paid.
Warfield said current streaming royalty rates are too expensive for most radio stations, which simply opt out. NAB would like to see a different rate standard so “broadcast radio can participate more fully in streaming.”
Cash and Williams of ASCAP called for more transparency about royalties and how they are is divided up.
As part of that effort, Pandora favors the creation of a single database of record, hosted by the Copyright Office, that would house all music copyright ownership information. By enabling services to ascertain quickly who owns which rights to a work, the database would also enable services to identify, on a catalog-by-catalog basis, the owners of the songs they perform. That would encourage true competition among copyright owners for distribution on digital platforms, Harrison testified.
New York Democrat Jerrold Nadler has said he’s working on copyright reform legislation to address the various laws governing artist compensation, no matter whether the song is aired on satellite radio, terrestrial radio or Internet radio.
Committee members Michigan Democrat John Conyers and North Carolina Republican George Holding introduced the “Respecting Senior Performers as Essential Cultural Treasures Act” in May. The RESPECT Act would require webcasters to pay music license fees for pre-1972 sound recordings.
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