Artists And Labels May Finally Earn Performance Royalties

On Friday last week in Washington, the National Association of Broadcasters’ (NAB) Radio Board met with the musicFirst Coalition for what the NAB called an “educational update” on the proposed terms of the Performance Rights Act (PRA).

The PRA, which was introduced by Rep. John Conyers and Sen. Patrick Leahy in 2009, and which the NAB opposes, would require terrestrial radio stations to pay royalties to performers and copyright owners of sound recordings (i.e., artists and record labels), in addition to the royalties radio already pays to songwriters and publishers.

The revisions to U.S. copyright law made in 1995 and 1998 (the Digital Performance in Sound Recordings Act and Digital Millennium Copyright Act, respectively) first put forth the notion of royalties for sound recordings. Following those pieces of legislation, a non-profit company called Sound Exchange was founded to,“collect statutory royalties from satellite radio (such as SIRIUS XM), internet radio, cable TV music channels and similar platforms for streaming sound recordings,” according to their website. While the performance royalty has been the norm in the digital space, terrestrial radio has fought it, tooth and nail.

However, in the meeting on Friday, the two groups appear to have met amiably.

“The NAB Radio Board had a full and productive exchange of ideas today on the status of discussions with musicFirst representatives,” Dennis Wharton, the NAB spokesperson said. “The talks are part of an ongoing dialogue with the Board and NAB membership on possible alternatives to pending legislation that would be devastating to the future of free and local radio. No votes were taken at today’s Board meeting. The Board reiterated its strong opposition to the pending bill in Congress, while agreeing that it is appropriate for NAB representatives to continue discussions with musicFirst. Interested parties will be updated quickly if and when new developments emerge.”

At least one small record label has, ironically, opposed the PRA, citing a fear that some radio stations may switch to talk or sports formats to avoid having to pay additional royalties. Savannah Music Group President Dave Gibson told the Nashville Business Journal yesterday, “It’s tough enough now to get songs on the radio as it is. We’re trying to get this company off the ground, and the smaller the playlists and the more stations that switch formats, makes it harder.”

Following the talks on Friday, the NAB posted a list of potential terms to their website, though stressed that the terms had “not been agreed to yet, but are under discussion by the industry.”

–Tiered rate of 1% or less for all net revenue (roughly $100 million for the industry) which is permanent and can not be adjusted without changing statute or by mutual agreement
–PERMANENT removal of CRB jurisdiction for terrestrial and streaming
–Streaming rate reduction from current rates
–Inclusion of radio chips on all mobile phones
–AFTRA issues resolved (agency commercial replacement on webcasts)

The tiered rate of 1% or less for all net revenue would be as follows:

–Commercial and non-profit stations with revenue less than $50,000 annually would pay the lesser of $100 or 1% of revenue annually
–Commercial and non-profit stations with revenue between $50,000 to $100,000 annually would pay $500 annually
–Non-profit stations with revenue more than $100,000 annually would pay $1,000 annually
–Commercial stations with revenue between $100,000 to $500,000 annually would pay the lesser of $2,500 or 1% of revenue annually
–Commercial stations with revenue between $500,000 to $1,250,000 annually would pay $5,000 annually
–Commercial stations with revenue more than $1,250,000 annually would pay 1% of revenue annually

It is important to note that stations with incidental music use – news, talk and sports radio – would not pay for music. Additionally, religious services – not religious music – would be exempt from music fees.