Radio vs Performance Royalties, this week on Capitol Hill.

This week “Radio” gets to respond to a House Judiciary Committee hearing on Performance Royalties in Washington, DC. At stake, in this battle of performers vs broadcasters is possibly billions of dollars. The first part of these hearings happened 2 weeks ago where those for imposing the performance royalty stated their case. One of those presenters was Congressman Jerrold Nadler from NY.

During Congressman Nadler’s speech, he pointed out that performers receive little to no compensation for the music that gets played on the radio. The very same music that drives today’s music stations to record profits. Simply put, his case is that radio is using artist’s music for free and profiting from it. He also used a statement that clearly has been used in the past and is done purely for showmanship when he states that America is on a short list of countries that include Iran, North Korea and China that doesn’t pay a performers rights fee.

At this week’s hearing, the committee will hear from the National Association of Broadcasters (NAB), Sirius/XM and Pandora. They will present their case as to why they shouldn’t have to pay for usage of music. After the first hearing, NAB EVP of Communications took the stand that radio has taken since music first appeared on any station and that is that radio provides a biggest platform for music and that the exposure for that music results in sales between $1.5 Million to $2.4 Billion a year. He also used the position that radio has used before and that is that if forced to pay these fees, they simply would stop playing music. He claims that stations would go all talk or simply go dark.

If this truly is the case and radio exposure results in sales of at least $1.5 million bucks then someone owes me some money for the music I put out on my label. The truth is that the sales that results range from Zero dollars to $2.4 billion a year. Again, everyone playing with words to give a better look for their case.

It’s an interesting dilemma for radio and here’s why. Back in the late 80’s, radio went from being filled with a lot of small time operators to being brought out by groups that eventually got swallowed up until we arrived at the mega broadcasting groups we have now like Clear Channel. They have bosses, Wall Street, that demand profits. A Billion dollar yearly bill probably isn’t going to go over too well for stock prices.

The other problem they have is that Internet broadcasters have been forced to pay this since 1995 and are still operating. They also have to pay the other royalties associated with playing music (BMI, ASCAP, SESAC, etc). And yet, they survive. So what can be done?

I’m not sure outside of making it fair by having all media outlets pay the same rates. But other types of media are used in television so let’s try to adapt the way they do business.

Here’s my take as someone that been broadcasting on the internet since 2006 and has worked at radio and record labels since the mid-80’s, a step ladder approach. Here’s what I mean, let take a minute and look at how television works. When a television network wants to air a movie, they have to pay a fee for that. Also, they can’t have the movie during its theater run.

Recorded music doesn’t have an outlet like movies do but what if the performers give radio a 2 or 3 month window, from date of release, of royalty free usage and then after that be forced to pay the performance royalty. Not only would that generate income for the artists but it will create more movement of songs on and off playlists that aren’t hits and that would allow for more artists to have a shot at getting on the radio.

Maybe this would work, maybe it wouldn’t but I do think that the day of radio having to pay these fees is coming and if it’s not, then I’d like a refund on all the royalties that I’ve had to pay so far for my stations. This issue needs to be settled and it needs to be fair to all those that are in the same boat, from the single station internet owner to the mega media company. Let’s do what’s fair for all.