by Shana Dines
Back in February, we reported on the progress of the Performance Rights Act (H.R.4789, S.2500) in a three-part series of articles. Part 1 provided the background of the bill, Part 2 explained the changes it would make to existing law, and Part 3 discussed the arguments for and against the bill.
On June 11, 2008, hearings on the Performance Rights Act were held in the House Judiciary Committee's Subcommittee on the Courts, the Internet, and Intellectual Property and on June 26, the subcommittee voted on and passed the bill. Next is consideration by the full Judiciary Committee and, if approved, the bill will move on to the House of Representatives.
However, before the Performance Rights Act was proposed on Dec. 18, 2007, a Concurrent Resolution Supporting the Local Radio Freedom Act had been introduced in the House of Representatives on Oct. 31, 2007 that, if passed, would nullify the P.R.A.'s intended changes.
While H. Con. Res. 244 has not proceeded past the first stage of the legislative process, it has been slowly gaining support and is now co-sponsored by 221 House members, with Rep. Green (D-TX) at the forefront.
Over a year and a half later, on May 12, 2008, Senate followed suit and introduced S. Con. Res. 82, with identical language and the support of twelve Senators, which is lead by Sen. Lincoln (D-AR).
The Local Radio Freedom Act has bipartisan support in both Houses and has greatly surpassed the Performance Rights Act's support.
The Local Radio Freedom Act gives a bottom line declaration "That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over the air, or on any business for such public performance of sound recordings."
The Local Radio Freedom Act is primarily supported by the National Association of Broadcasters (NAB) and the Free Radio Alliance. In rallying for this bill, NAB has distributed a new study by Stanford economics professor Dr. James Dertouzos to both Houses of Congress.
Dr. Dertouzos' study, called "Radio Airplay and the Record Industry: An Economic Analysis," shows a direct correlation between radio airplay and record sales. The report is being used as evidence of the main argument in favor of the Local Radio Freedom Act, that radio has always been a source of free advertising for recording artists.
The study used data from Arbitron for local radio ratings information, Nielsen BDS and Mediaguide for music volume information, Nielsen SoundScan for music sales data, and BIA Financial Network for radio financial data.
Dr. Dertouzos asked the question, "Does radio airplay provide the music industry with free promotional or advertising value?"
He compared sales of albums and digital tracks with variations in music exposures and determined that greater exposure had a positive and statistically significant impact on retail music sales. Dr. Dertouzos concluded that his study clearly demonstrates that radio airplay increases music sales.
If the Local Radio Freedom Act is passed, the inequality between terrestrial and internet radio will remain intact. Internet radio stations have been required to pay royalties not only the songwriters, like terrestrial radio stations do, but also to the performers since the passage of the Digital Public Performance Right in Sound Recordings Act of 1995.
Some are hoping that Congress goes a step further and extends the limitation on royalties to internet radio, as well.
Check back with MELON as more developments unfold.