Labels Gird for Hill Attack on Broadcast Royalty Structure
Recording industry groups are gearing up for a push on the Hill to restructure the way terrestrial radio broadcasters pay royalties, a task they have tried 3 times before. This year, the groups believe the timing is right due to heightened congressional awareness of the royalty structure from the XM-Sirius merger hearings and the dispute over Internet radio royalty rates. “Here we had [Sirius CEO] Mel Karmazin making our case for us,” said Recording Artists Coalition (RAC) National Dir. Rebecca Greenberg: “That really put it on people’s radars.” Broadcasters’ plans for HD Radio are also motivating the recording industry to act, said Hal Ponder, American Federation of Musicians (AFM) govt. relations dir.
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“HD Radio is going to make over-the-air radio more like its competitors in cable, satellite and online,” Ponder said. Meanwhile, those other distributors pay a royalty to performers and composers, while terrestrial broadcasters pay only composer royalties. Terrestrial radio “will have this competitive break by not having to pay musicians anything. It just exacerbates the same problem we've always had,” he said. And, as record sales continue to dwindle, terrestrial radio’s promotional value withers. “People are getting their music other ways, so there is no promotional value,” an industry source said: “What people are doing is they're listening, they're not buying.”
Congress should review the royalty structure, RAC, AFM, RIAA, Music Managers Forum, the Recording Academy and the American Assn. of Independent Music said last week in a letter to members of Congress. The letter came days after NAB CEO David Rehr sent one urging lawmakers to oppose a “performance tax.”
Recording industry groups will start by lobbying House and Senate Judiciary Committee members, Greenberg said: “I see this as being championed by the artist-friendly members of the Judiciary committees. That’s where we have to start.” The groups still are framing their strategy, she said: “We're just in the very beginning stages of this. We haven’t launched yet. We're by no means up and ready for battle.”
Thurs., Rep. Berman (D-Cal.) raised the issue at a press conference introducing the Copyright Alliance. He said the issue must be addressed, but he knows of no timetable. The recording industry is also likely to find support from House Judiciary Committee Chmn. Conyers (D-Mich.) and Senate Judiciary Committee Chmn. Leahy (D-Vt.), an industry source said.
A royalty rumpus could take some small broadcasters by surprise, said attorney David Oxenford: “The run-of-the-mill broadcaster doesn’t know what this means at this point. For the general broadcaster out there, the world of copyright is a mysterious world.” Sudden imposition of a new royalty could cripple their businesses, he said: “Paying an entirely new royalty that could conceivably be as much or more [than] what’s paid to ASCAP, BMI and SESAC could be devastating to a lot of the small broadcasters, and I don’t think they're aware of exactly what that means.”
NAB will do all it can to block new fees, a spokesman said: “NAB will be very aggressive in defending our radio station interests and making the case that if it were not for radio air play, a lot of folks in Hollywood wouldn’t be living in their mansions and recording artists wouldn’t be as successful as they are today.”