by Howie Cockrill
THE PARTIES & THEIR ARGUMENTS
In Part 1 of this article, I introduced the pending Performance Rights Act and provided some background on the controversial topic of a general public performance right for sound recordings.
In Part 2, I comparedthe current Copyright Act with the proposed changes of the Performance Rights Act.
In Part 3, I’m going to look at the parties involved and their arguments for and against the sound recording performance right.
In favor of the proposed legislation are:
- Members of Congress from both parties and both houses
- U.S. Copyright Office, as represented by Marybeth Peters - the Register of Copyrights
- Performers and recording artists
Supporting the Performance Rights Act are:
From the House of Representatives -
- Howard Berman (D-CA)
- Jane Harman (D-CA)
- Darrell Issa (R-CA)
- Marsha Blackburn (R-TN)
- John Conyers (D-MI)
- John Shadegg (R-AZ)
From the Senate -
- Patrick Leahy (D-VT)
- Orrin Hatch (R-UT)
- Diane Feinstein (D-CA)
- Bob Corker (R-TN)
- Lamar Alexander (R-TN)
ARGUMENTS FOR P.R.A.
The RIAA argues that it is fundamentally unfair that publishers and songwriters receive royalties from AM/FM radio broadcasts while record labels and performing artists do not.
Another factor, though often unspoken, is that labels are losing money each year from CD sales and that digital sales models have yet to take off.
In defending the proposed bill, Representative Berman states that retail revenue for the music industry declined from $14.5 billion in 1999 to $11.5 billion in 2006 - a drop of nearly 21%.
Thus, according to supporters of the bill, any claim that AM/FM radio should get a "free ride" because airplay contributes to record sales just is not true.
Put another way, labels need the money that the PRA could provide.
Internationally, most other countries have terrestrial radio performance rights for artists and labels. However, because the U.S. has no such right - foreign collection agencies refuse to pay money collected to U.S. artists and labels.
Representative Berman again weighed in on this aspect, estimating that 20-50% of music played abroad is "American made," and stating that because of the lack of reciprocity, the U.S. is denying its performers millions of dollars in revenue.
The major opponent to the PRA is the Free Radio Alliance, a coalition of individual terrestrial radio stations and other organizations, including the National Association of Broadcasters.
ARGUMENTS AGAINST P.R.A.
The NAB does not contend that the PRA will mean more money for labels. However, the NAB's position is that this money is unlikely to trickle down to the performing artists.
Additionally, the NAB argues that the PRA would essentially be a tax on the radio industry used to subsidize a failing music industry.
Specifically, the Charles Warfield from the NAB has stated that:
In addition to piracy, a major reason for the recording industry's revenue decline is its failure to adjust to the public's changing patterns and habits and how they choose to acquire sound recordings.
Any such shortcoming was not of broadcasters' making; nor should our industry be looked to as a panacea, through a tax or fee, to provide a new funding source to make up for lost revenues of the record companies."
Marybeth Peters, Register of Copyrights for the U.S. Copyright Office, has taken issue with any description of the new right as a "tax."
In her testimony before Congress, she stated that,
A tax is a charge levied by, and paid to, the state. A payment for use of a property right, on the other hand, is made to the owner of the right and the amount and terms of the payment are set by negotiations between a willing buyer and a willing seller.
The final argument made by the NAB is that opening the door for an AM/FM radio performance right will create a slippery slope. The rates will only increase over time, and eventually - institutions other than radio will be included, such as restaurants, bars, gyms and offices.
ON THE FENCE
Webcasters and satellite radio stations generally feel that the sound recording performance right, whether for analog or digital transmissions, should be scrapped altogether - especially as the rates they pay to SoundExchange have recently been increased.
Failing that, most in this group feel that a sound recording performance right should be applied equally across the board to all parties broadcasting music (terrestrial, internet, satellite), and that terrestrial radio should not be exempted from a royalty that webscasters/satellite broadcasters have to pay.
How did it come to this?
On July 31, 2007, Representative Berman chaired a House subcommittee meeting on the topic of expanding the sound recording performance right to include not just digitally transmitted performances, but also performances on terrestrial radio.
Making the case in favor of expanding the performance right was Marybeth Peters, the Register of Copyrights at the US Copyright Office.
Standing against the expansion was Charles Warfield from the National Association of Broadcasters.
On December 18, 2007, Berman from the House and Leahy from the Senate introduced the bill to their respective Judiciary Committees on behalf of themselves and their cosponsors to expand the performance right to include terrestrial radio.
On January 14, 2008, the House referred the bill to the Subcommittee on Courts, the Internet and Intellectual Property.
Currently the bill has been read twice before the Senate’s Judiciary Committee, instead of being referred to a subcommittee.
Senator Leahy introduced the Performance Right Act to the Senate on December 18, 2007.
Citing the historical détente between radio and record labels on the performance right issue, he argued that times have changed and that radio’s “airplay as promotion” argument is no longer coming in loud and clear:
There is no question that radio play promotes artists and their sound recordings; there is also no doubt that radio stations profit directly from playing the artists’ recordings…
But the performing artist is not paid by the radio station. The time has come to end this inequity. Its historical justification has been overtaken by technological change; the economics of the radio industry of years past has been superseded by entirely new business models.”
Leahy went on to add 2 additional points:
- Non-commercial and small commercial radio stations should be “nurtured and not threatened by a change in the law.”
- Songwriters and publishers should not have their rights diminished as labels and artists have their rights increased.
HOUSE OF REPS. INTRODUCTION
Howard Berman introduced the Performance Right Act to the House of Representatives on December 18, 2007.
He began by acknowledging and addressing some of the concerns of the bill’s opposers, namely that the bill:
- only repeals the current broadcaster exemption and does not apply to bars, restaurants and other venues
- protects small and non-commercial broadcasters by setting a “low flat annual fee with no negotiation, litigation or arbitration expenses.”
- only extends protection to musicians and labels; it does not hurt the rights and revenues of songwriters and publishers.
Echoing Senator Leahy, he described the current system as “anachronistic” and an instance of “corporate welfare.”
Implicitly referencing labor, incentive and economic theories of copyright, Berman stated that not only comity with international standards but also “fairness” to musicians, labels and other radio formats mandates that the U.S....
"require privately owned over-the-air radio stations to compensate those performers who create the music that broadcasters use to attract the audience that generate their ad revenues."
Check back with MELON as more developments unfold.