Performance Rights Act Discussed in Heated Senate Hearing

Posted on 05. Aug, 2009 by refe in NEWS

The Senate judiciary hearing on performance rights and parity was held yesterday on capitol hill to discuss the controversial Performance Rights Act. If you are unfamiliar with the bill you should know that it carries significant implications for the music industry. If this bill passes, terrestrial radio will be required to pay royalties to the performers of the songs they play, in addition to composers.

If you’ve been around the blog a while you might remember an article I wrote a few months ago dismantling what I considered to be five key flaws in the proposed legislation. At the risk of sounding self-important I suggest that you read that article if you haven’t already. The bill and my opinion of it have both evolved since then, but I still consider those 5 points to be critical. Particulary if you are an artist, because while it’s natural to instinctively support a bill that promises to increase your income it is still important to check the facts.

As I mentioned above, some key amendments have been made since the Performance Rights Act was introduced. They establish a sliding fee scale to address the concerns of smaller and minority broadcasters’ ability to afford new royalties. Here’s a concise summary of how that breaks down courtesy of Variety:

Royalty rates for stations that have annual gross revenues of $1.25 million or more would be established by the Copyright Royalty Board if broadcasters and performers are unable to negotiate rates on their own.

Commercial stations that gross less than $100,000 per year will pay a $500 annual fee.

Commercial stations that gross more than $100,000 and less than $500,000 pay a $2,500 annual fee.

Commercial stations that gross more than $500,000 and less than $1.25 million will pay a $5,000 annual fee.

Public, nonprofit religious and college music stations that gross less than $100,000 will pay a $500 annual fee. Those above $100,000 will pay a $1,000 fee.

None of the royalties will take effect for at least a year. For stations that gross less than $5 million per year, no royalties will be due for three years. For those above that figure, none would be due for another 12 months.

While these amendments don’t address many of my concerns, they are a big step in the right direction. I have no love for ClearChannel, but I don’t want to see local and volunteer radio pushed out of business by crippling rates. I still haven’t found anything that addresses the heavy record keeping burden that will be imposed on these small stations, however, and I know that is a big concern for many of them.

One important item in the above amendments is that royalty rates for the highest earning stations “would be established by the Copyright Royalty Board if broadcasters and performers are unable to negotiate rates of their own.” The creative industries – particularly music – rely far to heavily on government legislation in my opinion. This is supposed to be a free market. Rates and fees should be determined through a process of negotiation between buyer and seller, not by government.

That’s why the issue of payola throws such a wrench in the idea of record companies requiring additional fees from broadcasters. The market – in spite of government legislation – determined that air-time was worth paying for, not the other way around. Record companies were so determined to get their acts on the air that they were willing to throw down significant bribes to get it. The practice of payola continued until at least 2005 when Sony BMG was found guilty of buying airplay despite laws forbidding it.

Unfortunately, the National Association of Broadcasters (NAB) has to date been unwilling to participate in negotiations. As infuriating as this is it does make sense – they don’t want this bill to pass at all. Either way, they may not be able to hold that position much longer. During the hearing yesterday Senator Patrick Leahy said this to the broadcasters present: ”Legislation will move, and I suggest that you talk to the artists because I would want the legislation to be in the interest of both the broadcasters and artists.” In other words, start negotiating.

Whether or not Senator Leahy’s predictions are accurate remain to be seen. Before the hearing even took place a group of 22 lawmakers requested that the vote on the PRA be delayed ”until such time as the impact of this legislation can be fully examined.” It is at least encouraging to see that some lawmakers realize that this bill will have major implications and needs to be considered carefully.

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