Is ‘Fair Play’ A Threat To Local Radio Freedom?

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A 25-year Democratic Congressional veteran representing parts of Manhattan and Brooklyn and the Chair of the House Energy & Commerce Subcommittee on Communications and Technology have served notice that a bi-partisan push to create a “radio tax” has just begun.


Rep. Jerrold Nadler (D-N.Y.), Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet, and Rep. Marsha Blackburn (R-Tenn.), have re-introduced the “Fair Play Fair Pay Act,” with three other members of Congress — Rep. Darrell Issa (R-Calif.), Rep. Ted Deutch (D-Fla.), and Rep. Tom Rooney (R-Fla.) — signing on as co-sponsors.

The bill seeks to create “a modern and uniform system of rules governing music licensing for digital and terrestrial radio broadcasts.”

Such legislation has come under fierce opposition of the NAB and, as of March 23, 165 House of Representatives members oppose “any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over the air, or on any business for the public performance of sound recordings on a local radio station broadcast over the air.”

That’s the language appearing in The Local Radio Freedom Act (LRFA), legislation designed to counter what the “Fair Play Fair Pay Act” would enact.

Congress last brought to light the “Fair Play” act in the 114th Congress, when Rep. Nadler in April 2015 introduced the bill. It never made it out of Nadler’s subcommittee.

Collectively explaining their reason for reintroducing the legislation, the members of Congress assailed current music licensing laws as “antiquated and unfair, which is why we need a system that ensures all radio services play by the same rules and all artists are fairly compensated.”

They added that the nation’s laws “should reward innovation, spur economic diversity and uphold the constitutional rights of creators. That is what the Fair Play Fair Pay Act sets out to accomplish: fixing a system that for too long has disadvantaged music creators and pitted technologies against each other by allowing certain services to get away with paying little or nothing to artists.”

If brought to a House vote, the Fair Play Fair Pay Act would then require introduction in the U.S. Senate and a White House yay or nay. The legislation seeks to do the following:

  • Create a terrestrial performance right “so that AM/FM radio competes on equal footing with its internet and satellite competitors who already pay performance royalties.” Nadler represents part of the City of New York—home to Sirius XM. “This would resolve the decades-old struggle for performance rights and ensure that—for the first time—music creators would have the right to fair pay when their performances are broadcast on AM/FM radio.”
  • “Bring true platform parity to radio so that all forms of radio, regardless of the technology they use, pay fair market value for music performances. This levels the playing field and ends the unfair and illogical distortions caused by the different royalty standards that exist today.”
  • Ensure terrestrial royalties “are affordable,” capping royalties for stations with less than $1 million in annual revenue at $500 per year (and at $100 a year for non-commercial stations), while protecting religious and incidental uses of music from having to pay any royalties at all.
  • “Make a clear statement that pre-1972 recordings have value and those who are profiting from them must pay appropriate royalties for their use, while we closely monitor the litigation developments on this issue.”
  • “Protect songwriters and publishers by clearly stating that nothing in this bill can be used to lower songwriting royalties.”
  • Codify industry practices streamlining the allocation of royalty payments to music producers.
  • Ensure that artists receive their fair share from direct licensing of all performances eligible for the statutory license.

NAB COMES OUT SWINGING

In response to the introduction by Rep. Nadler of the Fair Play Fair Pay Act, NAB President/CEO Gordon Smith said, “NAB respectfully opposes the legislation reintroduced by Rep. Nadler that would impose a job-killing performance royalty on America’s hometown radio stations.”

Smith said that NAB “remains committed to working with Congress on balanced music licensing proposals that help grow the entire music ecosystem, promote innovation, and recognize the benefit of our free locally-focused platform to both artists and listeners. We’re thankful to 165 House Members and 21 Senators who back the Local Radio Freedom Act that acknowledges broadcast radio’s indispensable role in breaking new artists and promoting record sales.”

Reps. Michael Conaway (R-TX) and Gene Green (D-TX) are the principal cosponsors of the Local Radio Freedom Act in the House of Representatives. Sens. John Barrasso (R-WY) and Heidi Heitkamp (D-ND) introduced a companion resolution in the Senate (S. Con. Res. 6).

This week, Rep. Bradley Byrne (AL) and Sens. Ron Johnson (R-WI), Joe Manchin (D-WV) and Pat Roberts (R-KS) joined as co-sponsors of the resolution, pushing Senate support of the Local Radio Freedom Act to 21 members.


RBR + TVBR OBSERVATIONWe have one question to ask Rep. Jerrold Nadler: How much influence does John Malone have when it comes to introducing Congressional legislation? Based on Nadler’s continued push for the playfully named and ill-intended “Fair Play Fair Pay” act, we believe his actions wouldn’t have even come if not for the presence of Sirius XM in the Big Apple. 

While we have certainly not fallen in lockstep with the NAB on every issue facing the broadcast radio industry, we must ask who is feeding Nadler and the nabobs on Capitol Hill in support of this “fair” legislation their information? 

Why do we need legislation that would place “AM/FM radio on an equal footing with its internet and satellite competitors?” Ask Mr. Malone, whose Liberty Media controls Sirius XM. Internet competitors? Who is Rep. Nadler trying to suck up to?

Today, music loves have a world of choice, thanks to the internet, satellite radio and AM/FM radio. But, guess what? The majority of individuals who listen to music need a curator, and so do the recording artists who wish to become successful in the music business. That’s where radio comes into play. Thanks to the promotion of records through repeated airplay, songs become hits. Hits make stars. Stars are the essence of music industry success.

Without radio, you’re an “internet sensation,” a “viral star,” or whatever else they’ve pinned on a band that … you’ve probably never heard of. 

Spotify, Pandora, Sirius XM … as we said in our Media Information Bureau Intelligence Brief today, they are today’s CD player, 45 RPM player or cassette deck. They aren’t radio because they don’t make the hits. 

We don’t wish to dive into pre-1972 recordings and performance rights, as that is a bit of a different issue. Instead, we focus our argument on the fact that, as far as we can see, we have not seen or heard from a vociferous collective of recording artists who lament day in and day out about how they suffer from radio playing their music. Oh, those horrible radio stations, playing the recording artists’ songs with no royalties coming to them!

The royalties are increased sales in concert tickets, recorded music and other merchandise tied to an act most people wouldn’t ever be familiar with if it weren’t for radio. Isn’t that royalty enough, Rep. Nadler? Or, does John Malone own your ears?