Once again, artists, labels and performing rights agencies are uniting to take on a tottering but still formidable enemy in the United States: AM/FM radio.
Once again, they don’t stand a chance.
For decades, those three entities have put aside their differences in a battle to close the bizarre loophole that has allowed AM/FM radio stations in the United States to avoid paying performance rights to artists. This is a very American problem, and almost unique in the world: 97 countries have ratified the international treaty governing the payment of performance rights for broadcast. The United States is not one of them.
It’s also unique in media: streaming and even satellite radio pay performance royalties at rates set by the three-judge Copyright Royalty Board.
This theft represents a billion dollar loophole for the terrestrial radio industry: they essentially receive their primary product from wholesalers at a mandated 50% discount. They’ve leveraged this into a windfall, propping up broadcasters that still earn somewhere near $20 billion a year from car dealerships, big pharma and other advertisers.
Unsurprisingly, a loophole worth billions to the radio industry is being defended by millions in lobbying. Despite the bad PR, the industry is still ahead.
Broadcasters for their part claim their industry would be gutted if they had to pay the same fees as the companies broadcasting overseas or down the hall on digital radio. Playing music and selling ads against it, they claim, is a form of “free promotion” for performers. They’ve even claimed the non-payment of performance rights fees is a matter of national security, alleging that lower profits would degrade AM/FM radio’s ability to notify listeners in the event of an emergency. And lately, they’ve worried about what the payment of performance royalties would do to “local broadcasters” — the mom & pop operations that in reality were mostly gobbled up by entities like Audacy, Salem and Cumulus thirty years ago.
One of the most solidly consolidated industries in America, radio defends itself by donning the skin of their slaughtered prey.
These arguments are completely specious: radio is in decline, but largely due to mismanagement, repeated bankruptcies and drowning in debt from greedy and ill-advised acquisitions. Everyone can comprehend that a business model which works in 97 countries, from the United Kingdom to Syria, should be able to find safe footing in the United States.
The US House Subcommittee on Courts, Intellectual Property and the Internet held hearings on June 26 to hear from artists impacted by radio’s 70 year old exemption from paying performance royalties. It had a punchy title — “Radio, Music, and Copyrights: 100 Years of Inequity for Recording Artists” — and saw an array of witnesses likely to appeal to the average gray-haired congressman. Among them was country music star Randy Travis, who has been unable to tour after suffering a stroke a decade ago. With the aid of his wife, Travis described how radio is still offering him “free promotion” by selling ads against music he is no longer able to perform.
Every one us is going to come to a certain point when “just tour bro” is not a viable business model.
This is the heart of the issue for musicians in the 21st century, whether we’re talking about streaming fees or performance royalties: every one us is going to come to a certain point when “just tour bro” is not a viable business model. Maybe we’ll be old, maybe we’ll be sick, maybe we’ll be taking care of a child or loved one and can’t leave town for six months a year. Taking an L for revenue generated by your recorded music is not a retirement plan. Hollywood loves making movies about enigmatic artists “re-discovered” in poverty and old age, but poverty and obscurity is going to be the norm if we don’t do something about paying artists their fair share.
Unfortunately, that resolution is not likely to come as a result of these hearings or any other act of Congress anytime soon.
These hearings were in support of the American Music Fairness Act (AMFA), re-introduced again last year after failing to advance in past congressional terms. We’ve written about it before. The AMFA has bipartisan support now and in the past (not least of all due to the influence of songwriters from Nashville on Tennessee’s Republican delegation).
A talent manager once predicted that the radio industry would collapse before it would pay a single penny to a performer whose music had made them millions. Based on the state of the industry, that might actually come true.
The legislation is really quite incredible, and I’d urge anyone deeply concerned about radio’s survival if the industry was compelled to pay performance royalties to read it.
The bill would not set rates by act of Congress, but directs the Copyright Royalty Board — which already sets rates for streaming, satellite radio and other entities that pay performance royalties — to do so. There are huge carve-outs for actual “local” and community radio stations that the industry professes to worry about and sometimes pretends to be. Stations with less than $1.5 million in annual revenue would only have to pay $500 a year in performance royalties. Those with less than $100,000 in annual revenue could pay ten bucks a year and call it even.
One by one, the bills’ authors eliminated every rational objection the broadcasters have thrown at it over the years. Shockingly, the broadcasters still object.
This year, radio industry reps were excoriated by subcommittee chair Darrell Issa (R-CA), who accused the industry of engaging in bad faith negotiations with performers. Radio broadcasters had opened the door to these talks but refused to offer “one penny” to performers, Issa said.
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Speaking on behalf of performers, Michael Huppe, CEO collections agency SoundExchange, predicted the radio industry was trying to “run out the clock” on the AMFA as they have done in the past, dragging out hearings until the congressional term expired and forces advocates to start over again. While the hearings and testimony from people such as Travis were bruising, broadcasters wagered they would survive it.
And they will. This congressional term runs out in a few months. Like past iterations of the bill — such as the 2009 Performance Rights Act — it may advance from Issa’s committee but will die on the House floor.
In fact, most of the House has already voted against it.
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In April 2024, Resolution 13 was introduced in the House. The resolution is basically a paste-up of radio industry propaganda, lauding radio stations for providing “free publicity and promotion,” and warning that local news “during times of national emergencies” will be “jeopardized if local radio stations are forced to divert revenues to pay for a new performance fee.” (Told you they were serious about this.)
It’s quite a piece of work, and the resolution was incredibly popular in the House. The same radio industry that has turned the FCC into their private police force managed to get 225 House members — 218 is a majority — to sign off on the resolution, which has no purpose except to support radio broadcasters who don’t want to pay performance royalties. The resolution is non-binding, but represents a reasonable prediction of how the House would vote if it ever got that far.
Unsurprisingly, a loophole worth billions to the radio industry is being defended by millions in lobbying. Despite the bad PR, the industry is still ahead.
A talent manager once predicted that the radio industry would collapse before it would pay a single penny to a performer whose music had made them millions. Based on the state of the industry and their fight to keep stealing from artists pockets, that might actually come true.
Photo by Samuel Regan-Asante on Unsplash
