Late last month, the Ask Musicians For Music Act (the “AMFM Act”) was introduced in both the House and Senate. If enacted, the AMFM Act would impose on over-the-air broadcast radio stations a performance royalty for the use of sound recordings in their programming. This is yet another bill proposing that the current royalty that requires that digital music services pay royalties both for the use of musical compositions (as already paid by broadcasters) and the sound recording (currently paid by broadcasters only for the Internet streams of their programming) be extended to cover all over-the-air broadcasts by radio stations. Extending the sound recording performance royalty to over-the-air radio has been proposed many times before (see, for instance, our articles here, here, here and here), but this is the first time that the proposal has been advanced in the current session of Congress. Similar bills were introduced last session before the 2018 elections but were never brought to a vote in either the House or the Senate – see our post here.
As we’ve written before, the royalties that broadcasters pay to ASCAP, BMI, SESAC and even GMR are paid to the composers of music (and the copyright holders in the musical compositions, usually a publishing company). Sound recording royalties are paid to the performers (and the copyright holders in the performances, usually the record labels). These are the royalties that broadcasters pay to SoundExchange when they stream their programming on the Internet. Historically, in the US, broadcasters and other businesses who play sound recordings are not subject to a performance royalty for the use of those sound recordings (except for digital audio music services who do pay sound recording performance royalties in the US), though such royalties are paid in many other countries in the world. This bill proposes to make broadcasters pay for their over-the-air performances. Under the provisions of the bill, the Copyright Royalty Board would set these royalties along with those paid by digital audio services, and the royalties would be paid to SoundExchange.
The bill is relatively straightforward – eliminating the provisions of the Copyright Act that limit the sound recording performance royalty to digital performances – thus making it applicable to all audio transmissions. Interestingly, the bill does not propose to make the royalty applicable to television broadcasters or to any other business that plays music on its premises. So, under this bill, the royalty would not be extended to bars, restaurants or retail establishments (even though proponents of this royalty have, in the past, suggested the extension, see our article here). Perhaps the idea here is to attempt to isolate radio and attempt to get a royalty through for them, and later revisit the issue by seeking royalties from these other users of music in the future when the precedent has been established.
The bill also proposes other exceptions to soften the impact of the royalty. For example, for commercial stations with total revenues of less than $1,000,000, the annual royalty would be $500. Noncommercial stations licensed by the FCC would have royalties limited to $100 per station. Certain broadcasts of religious services would be exempt. But all other stations would have their royalties set by the CRB through the same process they use to set royalties for webcasters. All of the rules that apply to streaming – including the performance complement limiting how many times songs from the same artist can be played in given periods of time – would apply to broadcasters as well (see the discussion of the performance complement in our article here).
What is next for the bill? So far, there are no co-sponsors – the bill having a single sponsor in both the House and the Senate. The NAB also is nearing the point where they will have a majority of the members of the House of Representatives signing on to an anti-performance royalty resolution. With this show of opposition, it is likely that House leadership will be reluctant to take up this kind of controversial bill in a Congress that will be dominated by so many other major issues in an election year. Nevertheless, the bill lays down a marker showing that this issue is still alive and something that broadcasters need to think hard about. With smart speakers and other digital devices taking more and more radio users into the digital world, (see our article here about how listening on Alexa raises a station’s SoundExchange royalties), discussions with the recording industry to address this issue in some long-term fashion could be initiated. This will be an issue to continue to watch in coming years, as it clearly is not going away.
Courtesy Broadcast Law Blog
