Lawmakers Sing the Right Tune with Copyright Reform

When individuals perform a service or put on a performance, they naturally expect some well-earned compensation. The American economy is built on people using their talent and creativity to get ahead, and when pay doesn’t meet muster, companies are forced to change their ways.

Unfortunately, this is not so in the radio world due to outdated loopholes allowing terrestrial stations (AM/FM) to stiff performers of famous songs despite playing their music all day long. Broadcasters are strangely exempt from compensating the creators of sound recordings under copyright law, even though they are required to pay royalties to the writers of the same songs. The recently introduced American Music Fairness Act aims to remedy this long-standing problem, but the bill is already encountering stiff opposition from special interest groups such as the National Association of Broadcasters. It’s time to do the right thing and give performers their due.

Copyright law has been carefully crafted in the U.S. to simultaneously protect the rights of artists and creators and allow for subsequent innovation that will improve on the status-quo. Sound recordings have been granted federal protection for half a century and are consistently protected by the courts if copying is more than a brief clip. The glaring loophole written for terrestrial radio stations makes little sense, given that more than half of adults have listened to music in their car over the past six months. Compare that to the 33 percent of adults who stream music online via a paid service and the 27 percent of consumers who listen to music streamed over the internet. Radio may eventually go the way of the dodo, but its continued staying power for the time being means that the “terrestrial exception” to copyright protection is no small matter.

And, the gulf in compensation between radio performance and everything else is growing because of recent compensation decisions by the Copyright Royalty Board. Last year, the Board released terms and rates for webcasting royalties through 2025 applying to virtually all broadcasters showing performances over the digital domain. The government has been busy hiking compensation for digital song performances while keeping radio – a leading listener choice – flatlined at zero. The American Music Fairness Act would change this broken status-quo and level the playing field.

Interest groups such as NAB have cried foul at the new proposal, suggesting that allowing performers access to royalties would bankrupt radio stations. However, there’s preciously little evidence to support that view. It is entirely possible that larger radio stations would have to pay significant sums comparable to Sirius XM’s levy of 15.5 percent of its revenues. But, smaller radio stations would be protected against the sudden imposition of large performance royalties. The bill sponsors, Reps. Ted Deutch (D-Fla.) and Darrell Issa (R-Calif.) explain that their legislation exempts, “radio stations that fall under $1.5 million in annual revenue and whose parent companies fall under less than $10 million in annual revenue overall. For less than $2 per day ($500 annually), small and local stations can play unlimited music.” This provision allows for performers to get their due while protecting local radio stations from runaway royalties.

The American Music Fairness Act walks the tightrope of fostering innovation while protecting the rights of all parties.

David Williams is the president of the Taxpayers Protection Alliance.