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Will the Fair Play Fair Pay Act Get a Fair Hearing This Time?

On March 30, 2017, nearly two years ago to the day that they introduced the Fair Play Fair Pay Act of 2015, Reps. Nadler and Blackburn now re-introduce the bill as the Fair Play Fair Pay Act of 2017. Will this legislation go through or will it just be another “repeat and fade out?” My cursory review of H.R.1836 indicates that it is the same bill as the 2015 version, H.R.1733. Rather than re-inventing the wheel, I am re-posting my piece about the prior iteration of the bill from two years ago.

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On April 13,  H.R. 1733, The Fair Play Fair Pay Act of 2015 (FPFPA) was introduced by a group led by Reps. Jerrold Nadler (D-NY) and Marsha Blackburn (R-TN). This bill would make several amendments to the Copyright Act, the most noteworthy of which would be to provide a public performing right in sound recordings for terrestrial radio broadcasts. Most of the provisions in this bill are things that were previously proposed in others and many mirror recommendations in the Copyright Office’s recent 202-page music licensing report (the Report), which I summarized here.

For example, right before last fall’s government shut down, Rep. Melvin L. Watt (D-NC), introduced H.R. 3219, the Free Market Royalty Act, which, among other things, would’ve created a public performance right in sound recordings when played on AM or FM radio, something supported in the Report. What’s the big deal about a performing right in a sound recording? As many have pointed out, the US is among the less than handful of nations, including China, Iran and North Korea, that doesn’t have one.

So if you’re groovin’ to a recording of Fly Me To The Moon on AM or FM radio as part of the Sinatra centennial celebrations, the composer, Bart Howard, and his music publisher get paid but Ol’ Blue Eyes and his label get bupkis. However, if you listen to that same recording over Sirius/XM or stream it over the Internet, then everybody gets paid.  How’s that? Well, under amendments to the Copyright law in the 1990s, Congress created a performance right for recordings in digital transmissions but not for traditional radio and TV broadcasts.

The radio industry’s long-time rationale for not paying artists and labels is that airplay promoted the sales of recordings. However, in the current environment where the public is quickly moving from owning (e.g., CDs and downloads) to streaming (e.g., satellite radio, YouTube, Pandora), the “promotional” value of radio isn’t what it used to be. The performance itself is now the value proposition. And it kind of seems kind of unfair that labels and artists get paid for some performances but not others where the user experience is often virtually identical. This bill would provide “platform parity.”

So what else is in this bill? It fixes a loophole where some streaming services wouldn’t pay royalties on pre-1972 sound recordings because they’re not protected by federal copyright laws (although a couple of district court decisions recently told them otherwise). Addressing this situation, the Report recommended full copyright protection for pre-1972 recordings. And last year’s RESPECT Act would’ve provided for royalty payments on performances of these older recordings, but without providing full copyright protection. The FPFPA adopts the RESPECT Act approach and likewise provides for royalty payments without granting full copyright protection.

To make it more likely to pass, the bill has some protections for small broadcasters, capping royalties for stations with less than $1 million in annual revenue at $500 per year and at $100 a year for non-commercial stations, including public and college radio. Religious broadcasters, regardless of size, are exempted altogether.

The FPFPA also provides for royalty payments directly to artists even where the service does a direct deal with the labels if a statutory license were otherwise available. And these payments would be in the same proportion that SoundExchange currently pays on licensed services: 45% to the featured artist, 5% to the backing musicians and 50% to the label. This is a major protection for featured and side artists.

Moreover, there are also technical amendments to the rate-setting provisions for certain statutory licenses that attempt to provide a more uniform, market-based standard more evenly. Again, this issue was addressed in the Report and was handled somewhat differently in last year’s proposed Songwriter Equity Act. However, including statutory considerations like whether streaming is a substitute for sales of recordings or may otherwise interfere with or enhance a label’s revenue as well as the relative roles and value of the labels and streaming services could open a pretty big and murky can of worms.

Will this bill pass? Well, the National Association of Broadcasters (NAB) is vehemently opposing it. And the NAB is a pretty powerful lobby that’s long opposed paying royalties for broadcasting recordings. And while the music industry is largely concentrated in New York, Nashville and Los Angeles, every Congressional district has at least one radio station — and candidates need to advertise during elections.

 

 

Artists and Labels Paid for Radio Airplay?

Composers know that they should sign up with a Performing Rights Organization (PRO) such as ASCAP, BMI and SESAC to make sure they receive royalties for when their works are publicly performed in live performance venues, when broadcast on radio or TV or streamed over the Internet. Most people don’t realize, however, that when a work is played over the radio in the US, the writers and publishers of the composition receive payment for the performance through the PROs but the recording artists and record labels don’t receive a dime. So, whenever a radio station played Frank Sinatra’s recording of “New York, New York”, Kander & Ebb and their publisher got paid, but Ol’ Blue Eyes and Reprise Records did not.

In most other countries, there is a public performing right in a sound recording, but not in the US. There have been attempts over the years to fix this inequity. For example, since 1995, as amended in the Digital Millennium Copyright Act of 1998 (DMCA), there has been a limited public performing right in a sound recording. But, it only applies to “digital transmissions” which basically constitutes streaming over the Internet. SoundExchange was formed to act as a licensing collective, like the PROs, for this growing revenue stream and they pay artists and labels.

Last month, however, something occurred that may be a step in the right direction. Clear Channel, which owns 850 radio stations, and Warner Music Group, one of the industry’s major labels, announced a private deal where Clear Channel will pay public performance royalties to Warner and their recording artists. Clear Channel, apparently, will get a more favorable rate with respect to online streaming, which if you have been following what has been going on with Pandora’s continuing lobbying of Congress to reduce the rates they pay, has been an ongoing battle between webcasters and publishers and labels. Warner, in return, will receive promotion from Clear Channel, which likely means increased airplay, for their artists.

Is this a good thing? Paying artists and labels for the public performance of their recordings is certainly a step in the right direction toward aligning the US with the rest of the world. But at what cost? In exchange for increased exposure on Clear Channel stations, royalty rates for streaming are being nearly cut in half. And unlike the situation with SoundExchange, artists are not directly paid, but will be paid by the label. What is perhaps of even greater concern, however, is that this is a private deal between two industry giants. It remains to be seen whether this will deal set a precedent that will eventually enable all recording artists and labels (including indie, and artist-produced recordings) to collect public performance royalties. It probably won’t happen soon. A Congressional bill that would have given labels and artists a public performing right akin to what composers and publishers have long enjoyed died in committee in 2009. But one can hope – and lobby your local Congressman.

Update: On September 30, right before the government shut down, Rep. Melvin L. Watt (D-NC), introduced H.R. 3219, the Free Market Royalty Act, which would among other things create a public performance right in sound recordings when played on AM or FM radio.

This article was originally published in September 2013 on the ScoreStreet web site.