By: Brittany A. Estell
I. Introduction
On October 24, 2009 the Black Entertainment and Sports Lawyer Association (BESLA) hosted a seminar [2] titled “Give the Drummer Some: The Legislative Beat on Performance Royalties and Copyrights for Artists.” [3] The panel was comprised of supporters and a proponent of HR 848: The Performance Right Act. In general, supporters, Michael J. Huppe Jr. Esq. and Kendall Minter Esq., argued that performers should get a percentage/royalty from radio stations depending on how much profit they make a year. [4] In contrast, the proponent, Skip Finley, argued that record labels and artists are gaining free marking and promotion of artist by putting them on the radio; therefore, artists should not receive payment for play on the radio. [5] This article discusses the Performance Rights Act, which is in the legislature process and has been passed through the Senate Judiciary Committee October 15, 2009. [6] This article discusses the amendments that the Performance Rights Act intends to create. Part II presents both sides of the debate and why either side does or does not want the act to be passed. Part III implicates how radio broadcasters should recognize the right that musical artists hold a copyright in musical sound recording. On the same token, there is a discrepancy between how much artists should be paid.
II. Background
In order to understand the Performance Right’s Act the relationship between radio and copyright must be explained. “A musical copyright incorporates both the musical notes that form the core and any lyrics that may accompany a song…distinct from a musical copyright in the recorded performance of that song.” [7] The 1976 Copyright Act grants five rights to a copyright owner: “the right to prepare derivative works; right to reproduce the work; the right to publicly distribute the work; the right to public performance of the work; and the right to publicly display the work.” [8] Under the 1976 Act, sound recordings rights was not applicable to public performance. [9] According to §106(4) of the 1976 Act, song writers, composers, publishers, and owners hold copyrights to public performance. [10] In 1995, the Digital Performance Right in Sound Recordings act of 1995 (DPRS Act) was added as an amendment to the 1976 Act. [11] Radio broadcasters can air music on AM/FM stations without infringing on copyright, however, if these same stations stream music on the internet without paying a royalty they will be infringing on copyrights. [12] After much lobbying, corporate radio does not have to pay any labels, vocalists, recording artists, or musicians who make the sound that brings in listeners – and money. [13] The Performance Right Act was introduced in February 4, 2009. [14] The act would amend the federal copyright law in several ways. First, it would “grant performers of sound recording equal rights to compensation from terrestrial broadcasters.” [15] Second, the act establishes a flat fee for payment of royalties per/station, dependent on gross revenues. [16] The only stations that pay the flat fee have gross revenues less than $1.25 million or noncommercial, public broadcasting stations. [17] Third, there is an exemption for religious services from having to pay for, “incidental uses of musical sound recordings.” [18] Finally, the act offers a per-program license option. [19] Which in summary, would not allow radio to take into consideration any other royalties such as those given via digital performance or those given to songwriters, that would change or adversely affect the royalties they want to given to artists for radio play. [20]
III. Analysis
Critics and supporters of the Performance Rights Act see the legislation in two different lights. Critics sculpt the act as being the killer of radio, while supporters deem the act as a new way to support artists. The following explains the developing arguments of both sides of the debate.
A. Critics of the Performance Right Act
Those opposing the Performance Right Act include: Greater Media, Inc., Free Radio Alliance, College Broadcasters Inc., Border Media, etc. [21] Broadcasters call Performance Right Act a tax. [22] They make reference to the royalty payment as a tax because they believe that it is price that they should not have to pay, because radio freely promotes artists. [23] The National Association of Broadcasters, which represents 6,500 stations can be quoted as saying that “airplay gives ‘promotional value’ to artist because radio reaches more than 235 million listeners a week, providing free advertising that produces $1.5 billion – $2.4 billion in music sales annually.” [24] In addition, Kris Jones NAB spokesman, Dennis Wharton, NAB’s executive vice president of media relations, and Skip Finley all agree that the Performance Right Act can be classified as a large threat to radio, coming at a time where radio is losing huge numbers in revenue. [25] In 2008 radio saw a 18% loss in ad revenue, and prospects for 2010 do not look any better. [26] Furthermore, NAB executive VP Dennis Wharton said “NAB will aggressively oppose this brazen attempt to force America’s hometown radio stations to subsidize companies that have profited enormously though the free promotion provided by radio airplay.” [27]
B. Supporters of the Performance Right Act
Those supporting the act include organizations such as: SoundExchange, American Federation of Television and Radio Artists, The Rhythm and Blues Foundation, American Association of Independent Music, National Music Publishers Association, etc. [28] “It’s unfair, unjustified and un-American that artists and musicians are paid absolutely nothing when their recordings are played on AM and FM radio. Music is their work, their livelihood. They deserve fair pay for air play,” said Jennifer Bendall, executive director of MusicFIRST, upon introduction of the Performance Act in the Senate and House of Representatives. [29] Supporters of the bill contend that AM and FM radio stations earn close to $16 billion a year in advertising revenue, and do not compensate artist whose music is responsible for creating a audience for those stations. [30] Most performers’ money depends on the amount of music they sell and paid live performances. [31] Unfortunately not all artists are able to sell as much music as another; some don’t even have the chance to ever perform. [32] However, “many albums have a long life on the radio, but musicians are never fairly compensated since radio doesn’t have to pay a royalty on the music it plays.” [33]
III. Recommendation
The economic state of America, including radio seems to play the biggest role on both sides of the argument. Supporters want to compensate performers because royalty payments would provide income for smuggling artists. [34] While on the other hand, proponents do not feel that broadcasters should have to pay performers for the “free promotion” of their music which record labels are not able to provide artists with. [35] However, broadcasters should acknowledge the right that performers have to the royalties. If the recording artists/ did not perform the song, none of the song writers, record labels, nor radio stations would even have a product to disseminate. On the same token, radio is in no position to make the payout royalties. Supporters contend that the bill would set out a moratorium for one to three years before the royalties would have to be paid, but realistically, one to three years would be enough time for an economic turn in radio.
The question then becomes, whose revenue should suffer? Should artists continue to not be compensated for their performance? Or should radio delve into bankruptcy in order to pay these royalties? At this point, it is hard to discern which side of the argument is 100% accurate; however, legislature can take a first step in at least acknowledging the rights of performers as it does other holders of copyrights of the same song. Even if the amount that should be paid to artist is unknown, they can at least be provided with the right to their performance. Once the right is established, later a price can be discussed. It would seem only fair for a flat fee to be paid to the artist for use of the song, opposed to regulating how much an artist is paid based on how much the radio station itself makes in revenue. On the other hand, it is likely that smaller radio stations would argue that there should not be a flat fee because; they obviously are not making as much money off of the songs they play as their bigger competitors. That is a valid argument, but these small radio stations are still playing the same material as the larger stations, therefore because it is the same material they should pay the same price. In addition, once the act is passed, it should be from that point on that artists are paid their performance royalties. Having stations pay for any past artist performance would only dig the stations into a bigger hole of debt, and at that point no one would be paid.
IV. Conclusion
The Performance Rights Act is at the center of much controversy. At this point, its move into the senate is the farthest such legislation has ever made it. Radio is the only medium which does not have to pay for the use of another’s intellectual property. It is hypocritical to ask for performance royalties when music is streamed over the Internet by the same radio station that pays nothing to air the music on AM/FM stations. It is time that artists are paid when their song is played on the radio. On the same token, paying the artist has to balance between fairness to radio and fairness to the artist. It has to come at a cost that is fair and that will not bury a medium in performance royalty payments. However, before cost is even considered, a right to this “performance” must be recognized. Hopefully, legislature will take a leap, do the right thing, and recognize that artist are owed equal rights to their music as others who hold copyrights to the same song.
[1] The panel featured Leron Rogers, Esq., attorney at Hewitt ad rend Rogers, LLP as Moderator, and panelist Skip Finley, Vice Chairman ICBC Broadest Holdings, Inc., Michael J. Huppe, Esq., Executive Vice President and General Counsel at Sound Exchange, and Kendall Minter, Esq., Attorney at Minter and Associates, LLC.[1]
[2] THE CLIPSE FEAT. PHARELL, MR. ME TOO (Arista Records 2006).
[3] BLACK ENTM’T AND SPORTS LAWYERS ASS’N., THE DISRUPTERS: FOR CHANGE IN AN ERA OF NEW POSSIBILITIES (2009).
[4] Interview by Leron Rogers, Esq. with Michael J. Huppe, Esp., Executive Vice President and General Counsel, Sound Exchange and Kendall Minter, Esq., Attorney, Minter and Associates, LLC., BESLA CONFERENCE in Palm Springs Aruba, Aruba (Oct. 24, 2009).
[5] Interview by Leron Rogers, Esq. with Skip Finley, Vice Chairman, ICBC Broadcast Holdings, Inc., BESLA Conference in Palm Springs Aruba, Aruba (Oct. 24, 2009).
[6] Performance Rights Act Passed Senate Committee, COLLEGE BROADCASTERS, INC., Oct.15, 2009, http://www.askcbi.org/?p=561.
[7] 1 COPYLBP §4:38
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Bonneville Intern. Corp. . v. Peters , No. 01-3720, 2003 WL 22365268 (3d Cir. Oct. 17, 2003).
[13] 15 No. 9 ANENTILR 13
[14]H.R. 848: Performance Right’s Act, http://www.opencongress.org/bill111-h848/show (last visited Oct. 28, 2009).
[15] Id.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] MusicFIRST, http:.//www.musicfirstcoalition.org (last visited Oct. 28, 2009).
[22] Kristina Sherry, Radio Stations Set Up Battle Against Performance Rights Act, L.A. TIMES, Jul. 3, 2009, available at http://articles.latimes.com/2009/jul/03/business/fi-ct-radio3.
[23] Id.
[24] Id.
[25] Id.; Interview with Skip Finley, supra note 4
[26] Michael Schmitt, eMarketer Report Shows Streaming, Terrestrial Ad Revenue Moving in Strikingly Different Directions, RADIO AND INTERNET NEWSLETTER, Oct. 30, 2009, available at http://textpattern.kurthanson.com/articles/811/rain-1030-emarketer-report-shows-streaming-terrestrial-radio-ad-revenue-moving-in-strikingly-different-directions.
[27] Susan Butler, NAB Blasts Performance Rights Act, 120 Billboard 2, Jan. 12, 2008, at 22022 .
[28] MusicFIRST supra note 20.
[29] Performance Rights Act Passes Senate Committee, RADIO MAGAZINE ONLINE, Oct. 15, 2009, available at http://radiomagonline.com/currents/news/performance-rights-act-passes-senate-committee-1015/.
[30] MusicFIRST.org, supra note 20.
[31] Marsha Blackburn, NAB Blasts Performance Rights Act, BILLBOARD, March 7, 2009, available at http://search.ebscohost.com.proxy2.library.uiuc.edu/login.aspx?direct=true&db=aph&AN=28548429&site=ehost-live.
[32] Id. at 4
[33] Id. at 4
[34] Id. at 4
[35] Id. at 4