Fixing the music royalties system

The founders gave Congress the power to bestow on authors and inventors exclusive rights to the use of their work, and those rights have been expanding ever since. Among other things, lawmakers have stretched copyrights to cover not only the reproduction of original works but their performance in public. But that expansion has benefited some creators and not others. When it comes to music, songwriters have broad performance rights, but recording artists do not.

As a consequence, businesses that play music to help attract or entertain customers pay royalties only to songwriters, not to the bands and labels whose recordings they use. Musicians and record companies have been trying to obtain performance rights since the 1930s, when bandleader Fred Waring sued a radio station in Pennsylvania for playing one of his recordings on the air. He ultimately lost the case, and subsequent standard-bearers for the cause (Frank Sinatra among them) have not been much more successful on Capitol Hill. In 1995, lawmakers did create a performance right for recordings played by digital satellite and online radio services, but specifically exempted local radio stations’ over-the-air transmissions. The main reason: Local broadcasts have traditionally been the most powerful engine for promoting record sales, and that was considered sufficient compensation for airing the songs.

Now, however, artists and labels are gaining momentum in Congress, with the Judiciary committees in the House and Senate having approved bills (HR 848 and S 379) to end the exemption for over-the-air broadcasts. Although the National Assn. of Broadcasters is still opposed, it acceded to a request from senior members of the two panels to meet with representatives of artists unions, the Recording Industry Assn. of America and congressional staff. Those sessions began Tuesday in the Capitol.

The chances seem slim that a compromise will emerge from the meetings, considering that the broadcasters’ lobby has waged a full-throated campaign in Washington against the legislation. In the broadcasters’ view, imposing performance royalties for artists and labels now would be a death blow to minority-owned stations and other small radio outlets that are struggling with the current advertising downturn. They also argue that radio airplay remains the strongest force pushing releases up the sales charts. Besides, they say, the bill proposes that only half the royalties go to musicians; the rest would enrich a group of entertainment conglomerates that mistreat artists and customers alike.

We’ve been critical of the major record companies too, but we don’t see why recording artists’ copyrights should be weaker than those afforded songwriters, authors and other creators. Nor do we see the fairness in forcing online and satellite services to pay royalties while the terrestrial stations they compete with are exempt. The amount that radio stations pay for the privilege of airing music should be calibrated to reflect the promotional value of the airtime, as well as a station’s reach, audience size and revenue. But as the plummeting sales of CDs indicate, it shouldn’t be assumed that artists and labels receive as much benefit from having their music played as the stations do from playing it.

That’s one of the main problems with the current system: It’s tied to a business model that’s withering, at least for recording artists. Granted, recognizing broad performance rights for those artists could raise new issues: Would major labels be able to secure their dominance of the airwaves by accepting less than the industry standard royalty rate, underpricing smaller labels? Would powerful radio ownership groups be able to pressure artists and labels to waive their royalties in order to have their music heard? Why should nightclubs, bars and other businesses that play music to entertain their customers continue to be exempt, as they would be under the bills now pending? And why should the power of copyright holders be increased yet again, with no attempt to balance those powers against the public’s interest in having access to creative works?

Those issues are all worth exploring as the bills move forward. Instead of rehashing decades-old arguments about royalties, broadcasters, artists, labels and lawmakers should use their time together in the Capitol to find an approach to performance rights that compensates performers fairly, protects against abuses by the most powerful players and promotes the availability of music, while imposing a burden on local stations that’s light enough for them to carry.