Radio Ink - Radio's Premier Management & Marketing Magazine

August 4, 2009: The Senate Judiciary Committee held a hearing Tuesday on the Performance Rights Act, a bill that would for the first time impose performance royalties on broadcast radio. Committee member Dianne Feinstein (D-CA), a supporter of the royalty, presided over the hearing, which she said was designed to continue work that is "aimed to protect and promote the work of musical performers" and "resolve inequities" under copyright law.

Judiciary chair and original PRA sponsor Patrick Leahy (D-VT) said in an opening statement that, as of now, broadcasters are using somebody else's property without compensation" which is "not consistent with American property laws." But he said added that he wants to make sure the bill protects smaller broadcasters.

Leahy acknowledged that the NAB, which fiercely opposes the royalty, "has done a great deal of good in this country," but continued, "I think they need to sit down and work with us." He said, ""This is legislation that is going to move. The time to sit down and talk is now."

Sheila E: 'Mutual Respect'

The first witness to speak was recording artist Sheila E, testifying on behalf of pro-royalties organization the MusicFirst Coalition. Sheila E said she represents artists "who seek one simple right, and that is to be compensated for their labor," and said that, after a lifetime as a musical performer, she is "at a loss to explain why one industry, traditional broadcast radio, is allowed to profit from artists work without compensation to the artists."

Sheila E continued, "Every American worker deserves to be compensated for his or her label, and any business that profits from another's work should pay for that" and added that the NAB's position that radio offers promotional value is a "tired argument" that "wouldn't hold water" in other contexts.

In response to concerns about minority broadcasters, Sheila E pointed to the special accommodations in the House bill for smaller stations and said, "As a Latin artist, I want minority stations and minority artists to be able to thrive." If the bill passes, she said, "Musicians and broadcaster will enjoy a relationship of mutual respect that will allow both to flourish."

After RealNetworks EVP Bob Kimball spoke in favor of "parity" in royalties among audio outlets, Rounder Records owner Marian Leighton-Levy also testified in support of the PRA, saying the NAB has run a "misinformation campaign" about the royalties. She said, ""Taking your product without consent and using it to profit his or her own business without a penny in return. Unfair is not the word. It is unconscionable."

Newberry: 'Upend Local Radio'

Next up was NAB Joint Board Chair and Commonwealth Broadcasting President/CEO Steve Newberry, who began, "It will be no surprise to anyone in this room when I say that radio stations across the country oppose the performance fee legislation we are considering here today. I believe this legislation will upend local radio broadcasting as you have always known it."

Newberry said he has never seen such tough economic times in radio, but said that, beyond that, radio does provide compensation to artists with free advertising and exposure. he said, " Local free radio is the unique developer, exposer, promoter, and great popularizer of new and old music, to multiple new and old generations of listeners."

Newberry brought with him some material from a Salt Lake City radio station, that, he said, kept track of how many times it was contacted by labels looking for airplay between August 2008 and July 2009. He said the station received 9,597 e-mails and 755 calls from labels over that time. Newberryalso showed a platinum record plaque presented to WIHT in gratitude for its support of Usher's 2004 record Confessions.

After pointing out that radio's 235 million weekly listeners dwarfs the competition's audience, Newberry said, "At the end of the day, no one has been able to prove that the value of the music is always worth more than the value of radio's promotion. None of the witnesses here today can tell you that, and before this Committee passes legislation that will have a devastating impact on the radio industry, it seems to me that we should know the answer to that question."

After George Washington University Law School adjunct professor Ralph Oman, a former Register of Copyrights, spoke in favor of the royalties, NABOB Exec. Director Jim Winston pointed to other issues faced by minority radio, including difficulties coming to workout agreements with lenders and the ongoing controversy over the Portable People Meter's effect on minority radio.

Winston said, "The broadcast industry has been consistently been portrayed as one in which all of its participants make fat profits." But, he said, "for minority broadcasters, there are no fat profits to skim."

Is It A Tax?

Asked by Feinstein why radio pays royalties to songwriters and is not willing to pay performers, Newberry said the two groups are compensated in different ways. Songwriters, he said, "don't have, generally, the benefit of celebrity," and so are compensated financially "so they will have the ability to create those great songs that America has." Performers, on the other hand, are compensated through their "partnership" with radio. Newberry said of record labels, "They have spent millions of dollars to get their songs aired on the radio because they know that creates money for them."

Asked by Feinstein why the U.S. is the "only industrialized nation" that does not have a performance right, Newberry pointed to differences in copyright laws, with the U.S. having a far longer term than most other countries.

Feinstein then asked whether it is misleading to call the performance royalty a "tax."Newberry responded that, whatever the royalty is called, there is "no question that it is a movement of money from one industry to another, without, if it's done by the government, without it being a fair market transaction."