Radio has always had a strange exemption under US law: it doesn't need to pay the performers of the music it plays. Internet radio needs to pay. Satellite radio needs to pay. Digital music stations transmitted over cable lines have to pay. But not radio.
The House and Senate are now considering matching bills that would remove this inconsistency by forcing terrestrial radio to pay up if it wants to keep playing music—and broadcasters are livid.
While radio does pay a fee to songwriters, it pays no performance rights fee, in contrast to just about every other developed country on the planet. The broadcasters argue that they are providing free advertising to musicians, who then make money from touring and record sales.
Plenty of artists don't buy this (especially older artists who don't tour or sell albums, but whose hits still keep oldies stations in business), and they can't see why radio is exempted from paying for the music it uses to rake in ad dollars. Tom Waits, one of the most innovative singer/songwriters of the last quarter century, helped to found the musicFIRST coalition that advocates for a performance fee. "It's just plain wrong for radio to be allowed to build profitable businesses with growing revenues on the backs of artists and musicians without paying them fairly for it," he said in a statement today.
musicFIRST has the backing of some powerful members of Congress. Rep. Howard Berman (D-CA) and Rep. Darrell Issa (R-CA) had now introduced a performance rights bill in the House while Sen. Patrick Leahy (D-VT) and Sen. Orrin Hatch (R-UT) introduced the same bill in the Senate. The RIAA, of course,supports the plan.
The current draft sets up a scheme where commercial broadcasters pay a flat yearly fee (set by the government) to a group like SoundExchange, which would distribute the money to artists and labels. Small commercial stations would only pay $5,000 a year, and nonprofit stations like NPR would pay only $1,000 a year. Talk radio and religious broadcasts would pay nothing.
This has inspired apoplectic press releases from broadcasters and their supporters. The National Association of Broadcasters' Dennis Wharton played the xenophobia card. "After decades of Ebenezer Scrooge-like exploitation of countless artists, RIAA and the foreign-owned record labels are singing a new holiday jingle to offset their failing business model," he said. "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."
The Free Radio Alliance, likewise, calls the move a "transfer tax on local communities." Spokesperson Cathy Rought also deplored the fact that the government would "fundamentally meddle with the established business model of one industry." (Though without government intervention, a free market would long ago have demanded these fees; the RIAA has wanted them for years.)
Debate on the bills is likely to be fierce; the NAB issued a statement today pointing out that the competingLocal Radio Freedom Act (which would keep the current system in place) currently has the backing of 127 members of the House. In a sign of just how nasty this could get, the NAB has already retaliated by asking Congress to look into the propriety of major label recording contracts.