Making Waves and Asking Questions: Explaining Why We Need The Fair Play, Fair Pay Act in the U.S.

Featured Image by Tom Godber via Flickr

With the many headlines that have been seen over the past couple years regarding streaming services and artist revenue-related topics, even the casual music fan and average U.S. citizen may have begun to wonder what is going on behind-the-scenes of the music business as it relates to these topics. Perhaps, while driving in the car with the radio on, a listener familiar with some of the news coverage of an artist or company begins to wonder if and how the songwriters, producers, singers and musicians involved with creating the music in the song they are hearing are being compensated for its airplay of the song ? Maybe that listener hops on that very same radio station’s website, which also streams its broadcasts, and learns that the station pays musicians for the streams, but only the songwriters for over-the-air, terrestrial radio broadcasts of the same song.  Isn’t it curious that there are two different avenues of payment via two different guidelines by which payment revenues are distributed for identical broadcasts simply through different forms of media? Or, what of questions related to vertically-integrated media companies (ones that house both television and radio stations) and possess inconsistencies in their policies regarding the use of intellectual property? Protecting their copyright in their productions and insisting on licenses while charging a large fee to third parties wishing to license their television footage for other broadcasts…yet, all the while, claiming simultaneously that they don’t need a license nor need to make any type of payment to perform other parties’ copyrighted music on their radio stations. Inconsistent is putting it lightly, as there are a number of double-standards and loop-holes being exploited for gain through outdated laws as it would pertain to copyright and intellectual property. These are among the very topics that are currently being brought forward for review by members of the U.S. Congress in Washington, D.C.

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Photo by Joe Haupt via Flickr

In the United States, terrestrial radio stations pay standard licensing fees to get blanket license(s) from nationally-based performance rights organizations, such as ASCAP (The American Society of Composers, Authors and Publishers), BMI (Broadcast Music, Inc.), and SESAC (The Society of European Stage Authors and Composers) to compensate musical composers, songwriters, and publishers. This allows permission for the radio stations to play the songs/compositions that these three PROs represent. Traditional, commercial terrestrial radio sells on-air advertising, which generates revenue streams for the radio station. The PROs then calculate the licensing fees based on the wattage, audience size, and location of the radio station, as well as on other factors. Radio stations regularly pay a license fee and submit their playlist data to these PROs, who distribute the revenues. From that licensing revenue the PROs then pay the publisher of the song revenue 50%, and the songwriter(s) 50% as well. However, in the US, there is no public performance right for sound recordings, so neither the record label that released the music, nor the person who recorded the song and who you hear on the radio, receive any compensation for the terrestrial performance of their recording.

While PRO’s distribute equal amounts to the publisher and songwriter of a public performance broadcast of a song, any other parties involved with the recording are not compensated. The MusicFIRST Coalition (who offers a link to submit messages of advocacy directly to the U.S. House and Senate on the measure) points out that for artists whose music is played over AM/FM radio there is “a performance right for radio in almost every industrialized country. America stands outside this mainstream, alongside nations like North Korea, China, and Iran who also deny performance rights… A performance right would allow Americans to collect royalties they earn from international airplay. Today, overseas royalties are collected but never paid because the U.S. denies performance rights at home.” And so, due to a lack of reciprocity on our part as far as sharing what is, otherwise, a near-globally-accepted practice of royalty distribution to music creators, here in the United States our artists are denied those performance royalties for the international airplay of their music in other countries. How much of a loss to our economy in the US does that add up to? Around $100 million or more a year in royalties that artists never receive, moneys that do not make their way here and into the pockets of our music creators on account of our nation not having the correct revenue stream ‘pipeline’ in place.

A way this could work better is to first fix our outdated laws surrounding copyright and intellectual property, which do not translate in the modern technological landscape of digital media platforms and music distribution and consumption. Presently, there is a measure (H.R. 1733) called “The Fair Play, Fair Pay Act of 2015” that has been presented to Congress this year, that is co-sponsored by congressional representatives Jerrold Nadler (D-N.Y.), Marsha Blackburn (R-Tenn.), John Conyers Jr. (D-Mich.) and Ted Deutch (D-Fla.) which is also being lobbied for by members of The National Academy of Recording Arts and Sciences and backed by PRO entities such as Soundexchange.

The measure that took front and center stage during the recent April 16thGrammys On The Hill” advocacy day on Capitol Hill in Washington D.C. at which hundreds of members of The Recording Academy (including myself and members of the Philadelphia Chapter) walked the halls of Congress, meeting with state congressional representatives to represent this measure and share on the resolutions that it will bring. The “Fair Play, Fair Pay Act” requires that royalty revenues and payments be distributed to musicians for use of all recorded music that is used for commercial purposes by terrestrial (traditional) and digital radio. The measure would create a performance right for artists on terrestrial radio and would require terrestrial radio stations to make royalty payments, via performance rights organizations, to performers for the broadcast of their music. It would also require every type of radio to pay master recordings royalties on all music created prior to 1972. While on Capitol Hill, I had the pleasure of meeting the President/CEO of The Recording Academy, Neil Portnow, who has been one of the most vocal advocates on behalf of music legislation. In a recent statement regarding the “Fair Play, Fair Pay Act” President Portnow said that it “brings fairness to many issues facing music creators in a comprehensive approach — ‎a concept and position advanced and championed by the Recording Academy and its broad constituency.

In addition to requiring royalty payouts from the ($17.5-billion) terrestrial radio industry, the bill would also alter the way that satellite, Internet and streaming services currently pay for the use of music which is a major component of their businesses. Another issue this measure addresses is how some satellite and Internet radio services similarly have utilized the absence of federal copyright protection of recordings that made before 1972 to their advantage by refusing to pay royalties outright on any music they play from before that time. One of the major issues addressed by the “Fair Play, Fair Pay” act is how our outdated copyright laws, which were written before digital media and modern technology existed, are not able to cover the broad spectrum of intellectual property ownership and distribution of original content in the present and future consumer markets. Living in a major market city here in Philadelphia, I am fortunate to be a part of a community that is comprised of so many different music-makers at every stage of the musical creation, recording, promotion and distribution, and live performance processes. Artists old and new, in the broadest spectrum of variety and talent from the pre-1972 era through the present as well as representation of seemingly most every genre you can imagine. It is a community made up of the very artists and creative professionals whom these issues and this bill impact the most both here and around our nation. What’s more, Philadelphia and its surrounding area possesses a rich history and thriving culture in recorded music and in music production. A part of the music reform being proposed this year includes the “Allocation For Music Producers Act”, or “The AMP Act” (H.R. 1457) to establish a consistent and permanent means for paying producers the royalties due to them for digital streaming under current statutory licensing, as producers were left out of the statutory license when it was created. The U.S. Copyright Office (who has written an extensive report on Copyright and the Music Marketplace regarding music licensing and how it may be improved) has stated that “the Office agrees that [The Recording Academy’s] proposal to confirm the existing practice through a technical amendment of the statute merits consideration.” It was based on this concept and on the Copyright Office’s support that the foundation was laid for the “Allocation For Music Producers Act” that was formally introduced this year with The Recording Academy’s support on March 19, 2015.

The President of SAG-AFTRA (Screen Actors Guild/American Federation of Television and Radio Artists) Ken Howard released a statement regarding “Fair Play, Fair Pay”, saying that “This bill brings music licensing for sound recordings into the 21st century,”…“AM/FM stations will finally pay royalties on the sound recordings they broadcast. Right now, performers receive nothing — no royalties at all — for use of their recordings on AM/FM radio. This is something our members, including the late and great ‘Chairman of the Board’ Frank Sinatra have fought for decades to establish.”…“This bill establishes a uniform fair market value royalty standard for all services and ensures that creators of sound recordings made prior to 1972, some of our most beloved and valued music, are fairly compensated when their music is played…” The most commonly-voiced opposition to these measures in the past has been that the cost of revenue payouts would be too much for small, local radio stations to bear economically. Fortunately, a provision in the “Fair Play, Fair Pay Act” exists that ensures the royalty dues paid out to the Performance Rights Organizations will be appropriately scaled in amount to the ‘classification’ of the radio station. This would mean that smaller stations will only be responsible for paying a smaller and easily-affordable amount of royalties (around $100-$500) depending on factors including wattage, audience size, location and broadcast-radius. To further offer help towards financial stability and support for independent, publicly funded and/or University-owned radio stations, I would also propose that the U.S. Government appropriate nationwide funding, discounts or tax breaks towards the installation of natural renewable energy wind turbines which would easily cover and absorb/reduce the cost of operations and potentially produce excess energy to sell to the surrounding areas in order to generate additional station revenues. Wind turbines energy systems have seen success in the State of Massachusetts in powering and saving money for academic institutions such as a middle school in Medford, MA as well as Holy Name Central Catholic Junior/Senior High School in Worcester, MA. Just imagine what a wind turbine positioned in one of the open fields nearby Philadelphia’s own WXPN could provide in both power to the station and its operations as well as in a source of research and educational study for students at UPENN.

In reaching out to some of our great local music figures here in Philadelphia, Wendy Rollins of Radio 104.5 shared her thoughts related to the Fair Play, Fair Pay Act following a recent panel with the Philadelphia Chapter of The Recording Academy at The Kimmel Center:

The majority of artists we play write their own material however, I would side with the performers on this one. I believe writers absolutely should be compensated…but… if Sarah Smith performs your song it may do fine but if Beyonce does it will skyrocket and that money will be simply because of her name. Therefore that performer should be compensated for the attention they bring to a song.

Kristin Thomson, the Co-Director of the US-based non-profit Future of Music Coalition’s Artist Revenue Streams research project, has shared her perspective as representative of FMC which has covered the measure in depth:

The fact that the United States doesn’t have a public performance right for sound recordings is a travesty, on more than one level. The lack of public performance right not only means that performers and record labels are not compensated when their sound recordings are broadcast on US-based radio stations, it also means that the royalties generated from airplay in other countries cannot flow back to American rights holders because we have no reciprocal right. As with legislative efforts over the past 15 years designed to address this anomaly, Future of Music Coalition supports the passage of Fair Play Fair Pay Act.

As these measures are brought to the forefront of the attention of our nations lawmakers, it sounds as though the airwaves between members of Congress and the creators of music are now more open than ever, and growing clearer by the day. It’s relieving that the two are more and more finding themselves on the same frequency, only growing in signal strength as Capitol Hill is receiving what we are broadcasting: That the time for change is at hand, and that this will establish a more level playing field for both the protection of copyright and intellectual property as well as the fair compensation and return for one of America’s greatest exports. Our music.

1 Comment

  1. John Michaels

    December 15, 2015 at 11:08 am

    The bill HR 1733 is not level at all ! I agree with part of it and there is part I don’t agree with.

    Small internet radio broadcasters for years and years have been doing the right thing. We pay our licensing fee’s !! We have been paying our licensing fee’s ! FM radio and all the other terrestrial industries have been finding every loophole possible to NOT pay their fee’s.

    So along comes Rep. Nadler and HR 1733 with this bill that finally corners the terrestrial stations, GOOD ! I’m glad that FINALLY they have no way out. BUT !

    It also punishes the small internet radio broadcaster by RAISING our fee’s for doing the right thing for many years !! Do you call this fair ?? As a small internet radio broadcaster, I don’t find it fair at all ! In fact, it’s downright offensive !

    Because now terrestrial radio HAS to FINALLY pay their bills like they should have been doing for years , like small internet radio broadcasters HAD already been doing, Now they want all of the pie and want ONLY the RICH to be able to utilize the internet to broadcast. Raising the rates so high, that small broadcasters cannot afford to do what they have been doing for years.

    It’s wrong. It’s unfair. It’s a shyster way of doing things , but then again , we have come to expect only the worst from terrestrial radio haven’t we ?

    I am disgusted with the part of this bill that punishes the small internet radio broadcaster for doing the right thing for many years.

    Why isn’t terrestrial radio being sued for past royalties that they SHOULD have been paying for the last 15 years ? Why aren’t they being fined for avoiding paying their bills with any possible loophole they could find ! Why are we being punished for actions of shysters ?

    People in congress need to look at the whole story and hear from small broadcasters as well, not just the big players with the big mouths and loud whining !

    John Michaels
    Small Internet Broadcaster
    Proud to have been paying
    my royalties for the last
    8 years without fail !

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