Senate Holds Hearing On Performance Royalties
November 13, 2007

Today's Senate Judiciary Committee hearing on "Exploring the Scope of Public Performance Rights" saw both sides of the debate on the additional royalty for radio speak before lawmakers. Singer-songwriters Lyle Lovett and Alice Peacock spoke on behalf of musicFIRST, the organization pushing for the performance right.

"When radio plays recorded works, they generate profit for themselves because they attract listeners and advertising dollars. Yet radio has never compensated performers for the value their creative work brings to the radio industry, because the Copyright Act does not protect sound recordings in the same way it protects the underlying songs,” said Lovett. “Let’s face it. No one tunes into a radio station to hear the commercials.”

Lovett also spoke on the international effect of these rights, saying, "Foreign radio stations often broadcast a high percentage of American music, but we don’t get our share of the royalties due to our lack of a right in the U.S. This is amazing. We’re responsible for 30 to 50 percent of music played on stations around the world, and we don’t have a performance right? I can understand why China, North Korea, and Iran might not. But the United States?"

NAB Radio Board Vice Chairman Steven Newberry, President/CEO of Commonwealth Broadcasting Corporation, spoke on the organization's behalf at the hearing. Newberry said, "The existing model works for one very simple and significant reason: the promotional value that the record labels and performers receive from free airplay on local radio stations drives consumers to purchase music. A survey done by Critical Mass Media shows that 85 percent of listeners identify FM radio as the place they first heard music they purchased. With an audience of 232 million listeners a week, there is no better way to expose and promote talent."

Newberry added, "What I fail to understand after nearly 30 years in the radio industry is why the recording industry is willing to essentially bite the hand that feeds it. The 'free airplay for free promotion' concept has established a natural symbiotic relationship between local radio and the recording industry. Both grow and flourish together. But a new performance tax takes this mutually beneficial system and transforms it into an unfair, one-sided scheme that financially benefits only the recording industry - and to the detriment of the local radio stations. The negative effect of such a dramatic increase in radio station costs will be felt by radio stations and their listeners across the country and in every one of the states you represent. Many many radio stations across the country are struggling to be profitable since most of our operating costs are fixed. The money to pay for this new performance fee has to come from somewhere."

He continued, "So what are my options? Do I reduce the community affairs programming, including essential news and weather in times of emergency? Because I can't reduce my electric bill. Am I forced to layoff staff or cut the employee benefits at my stations? Because I can't reduce my FCC regulatory fees. Do I move to a non-music format, which will have the effect of playing less music, which will ultimately harm the performers? There's a reason the National Religious Broadcasters, the National Association of Black Owned Broadcasters, the National Association of Farm Broadcasters and the Independent Spanish Broadcasters Association all oppose the imposition of any new performance fees. The answers are not simple and the consequences of this debate will hit both industries in unanticipated ways."

Alice Peacock rebutted the NAB's argument, saying, "Every performance has the potential to be promotional, but why should that make a difference. I just got back from a gig in Grand Rapids, MI. Imagine if the club owner used the same logic about promotion. What if at the end of the night, after I had filled his club with paying customers, he told me he didn’t have to pay me because my performance helped promote my record sales. Such a scenario would be unacceptable by any standard. Frankly, the promotion argument sounds a little silly."

AFTRA (American Federation of Television and Radio Artists) has voiced its support once again for the proposed new royalties. "Recording artists fuel the business that sustains radio in the U.S.," said Kim Roberts Hedgpeth, AFTRA National Executive Director. "Advanced nations recognize artists' value to terrestrial radio. The U.S. has recognized artists' value to satellite and webcast radio. It is time for this last isolated area of inequity--terrestrial radio in the U.S.--to be fixed by establishing the right of recording artists to receive fair compensation for the value they bring to the American airwaves." 

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