Public performance royalty hearings continue in Senate

Last week, it was the Senate Judiciary Committee's turn to direct its attention to the debate about the public performance right for sound recordings.

A little primer: When you hear a song on regular radio in the US, the composer/songwriter/publisher are compensated for that "public performance" via ASCAP/BMI/SESAC, but the performer and record label are not.

However, if you hear the same song performed on XM or Sirius, or on a webcast, or on a cable music station, even on that very same terrestrial radio station's webcast -- the songwriter and publisher get their ACSAP/BMI/SESAC royalties AND the performer and record label are compensated via SoundExchange. You can read a lot more about the public performance royalty on our fact sheet.

This difference exists because US terrestrial broadcasters have been exempted from paying a public performance right for sound recordings for decades, despite the fact that this right exists in almost every other Western country. This exemption has withstood repeated criticism and advocacy for change, but the National Association of Broadcasters is a very powerful trade group that has been able to beat it back every time.

On Tuesday, Nov 11, the committee called up four witnesses: singer/songwriters Lyle Lovett and Alice Peacock, NAB Radio Board Vice Chairman Steven Newberry and noncommercial broadcaster Dan DeVany of WETA.

Lyle Lovett touched on the negative effect this exemption has on artist revenue. Most particularly, since the US is one of the only countries in the developed world where there is no performance royalty for sound recordings, there is no reciprocal agreement to collect US performers' share of royalties from performances in other countries. That means that when Lyle Lovett's songs are played in France, for example, a performance royalty is collected on his behalf, but there's no mechanism through which he can be paid. This anomaly has left millions of dollars on the table instead of in artists' pockets.

The rest of Tuesday's hearing was somewhat predictable, with Steven Newberry continuing to call it a "performance tax". But the NAB has also stepped up its attempt to discredit artists and record labels, suggesting that the record industry is just going after the broadcasters now because they need more revenue to improve their bottom lines. From the NAB's testimony:

"...the recording industry’s pursuit of a performance tax at this time appears to result in part from illegal peer-to-peer sharing of sound recordings, and in part from the loss of revenues from the sale of recorded music and an inability of record companies to timely adapt to rapid developments in digital technology and consumer demands. Broadcasters are not responsible for either one of these phenomena, and, particularly in the current highly competitive environment, it makes little sense to siphon revenues from broadcasters in order to prop up the recording industry’s failing business model."

Anyone who has been following this debate knows that this is not new. This is a right that recording artists (including Frank Sinatra) and the US Copyright Office have been advocating for for more than 30 years. Plus, it already exists on the non-radio digital platform. XM, Sirius, webcasting stations, cable stations -- even the webcasting version of these very same terrestrial stations that are arguing against this -- are already paying the digital performance royalty. What artists want is for Congress to move toward a system where all media platforms are operating under the same set of royalty responsibilities.

The NAB has also been employing a bit of verbal jujitsu, suggesting that if recording artists aren't as well off as they should be, then perhaps Congress should be looking at the contracted relationship between record labels and artists, instead of trying to get more money out of radio.

FMC will be one of the first to stand up and say that recording contracts have historically been unfair for musicians. In fact, we did a whole critique of these contracts that you can read here.

But that's beside the point in this debate. The NAB is tempting Congress to think that these royalties would be paid to the record labels for dispensation to their artists. That's not the way it works. Just like ASCAP/BMI/SESAC pay songwriters/composers/publishers directly, rather than relying on the publishers to pay the writers, recording artists are paid their 45% directly via SoundExchange. Non-featured artists get their 5% share directly from the AFM-AFTRA Intellectual Property Rights Distribution Fund. The money does not pass through the labels first. Recording artists are paid directly by SoundExchange.

Tuesday's hearing finished with Senators asking the witnesses to gather some "hard facts and numbers" and send them to the committee, so that it could act "equitably" in addressing the matter. FMC will continue to monitor and participate in the proceedings. Stay tuned....