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Panel Revives Debate Over Performance Fees Panel Revives Debate Over Performance Fees Panel Revives Debate Over Performance Fees Panel Revives Debate Over...

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Panel Revives Debate Over Performance Fees

June 6, 2012

A House Energy and Commerce panel reignited a fight Wednesday over whether radio stations should be required to pay a fee to musical artists, in addition to paying composers and publishers when they play songs.

The music industry made an aggressive push two years ago for legislation that would require radio stations to pay performers when they play their music on traditional terrestrial radio stations but the issue hit a wall of resistance from broadcasters. Internet and satellite radio stations pay a performance fee while terrestrial radio stations are exempt, a loophole Internet radio providers and music industry officials say lawmakers should close.

Under the current system, music industry groups such as BMI and SoundExchange collect royalties for songwriters or music publishers and distribute them to their members. Legislation would be needed to determine how the system would work for royalties for performers.

"Obviously these issues are within the jurisdiction of the House Judiciary Committee and so I look forward to continuing to work on these issues with all the stakeholders," Rep. Bob Goodlatte, R-Va., chairman of the Judiciary Intellectual Property subcommittee and a leading contender to chair the full committee in the next Congress, told Tech Daily Dose in a statement.

"Without the songwriter putting that first note on paper, without the musicians performing that song in ways that move us...there would be no iPods, no Pandoras, no labels, no publishers," Jazz musician Ben Allison told the Communications and Technology Subcommittee during a hearing on future of audio. "Music must be respected, content protected online and all creators compensated."

Pandora founder Tim Westergren argued that broadcasters have an unfair advantage over other distributors, including online radio stations like Pandora. At the same time, he said the rates imposed on online radio stations are much higher than what other distributors pay, noting that half of Pandora's revenues last year went to performance fees.

"We are fully supportive of fair compensation for artists. But this lack of a level playing field is fundamentally unfair and indefensible," Westergren said. "It's time for Congress to level the playing field and to approach radio royalties in a technology neutral manner."

Both the House and Senate Judiciary committees approved legislation in the 111th Congress that would require terrestrial radio stations to pay performers, but the measures died beneath stiff resistance from broadcasters. Broadcasters and music industry officials have failed to work it out among themselves.

The issue gained new life after it was revealed Tuesday that singer Taylor Swift's label Big Machine has reached a deal with Clear Channel to share revenues from the company's terrestrial radio stations.

Recording Industry Association of America Chairman and CEO Cary Sherman said while his group is "delighted" that the nation's biggest radio group Clear Channel has recognized that performers should get paid, there needs to be "an industry-wide solution." Sherman said after the hearing that his industry might be willing to give on the rates paid by online radio stations, which broadcasters also voiced concern about, if radio stations are willing to give on the performance rights issue. It's a matter of "finding the right balance," he said.

Broadcasters dismissed the Clear Channel-Big Machine deal as an agreement between two players in the marketplace and said the industry still opposes requiring terrestrial radio stations to pay a royalty to musicians. They have long argued that musicians benefit from the exposure they receive from having their music played on radio.

Meanwhile, the panel revived the debate over broadcasters' call for wireless manufacturers to include and activate an FM chip in wireless phones so consumers can easily access radio stations on their mobile devices.

Jeff Smulyan with Emmis Communications argued that the chip would ensure users can get critical information during emergencies when they can't make calls or send text messages on that same device. While acknowledging that some mobile phones now come with an FM chip, he complained that wireless providers do not automatically turn the feature on for consumers. The industry is not calling on Congress to mandate the inclusion of such chips, but instead would like to see lawmakers study the issue, Smulyan said.

Wireless and electronics manufacturers argued that manufacturers have responded and offer some phones with a radio chip included but that consumers have shown little interest. "We're not seeing consumer demand for it," Chris Guttman-McCabe with the wireless industry group CTIA told the panel.

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