Lovett or leave it? Royalties down the Hatch?


Music talents Lyle Lovett and Alice Peacock held forth before the Senate Judiciary Committee on the topic of performance royalties, better known to broadcasters as a performance tax. Commonwealth Broadcasting’s Steven Newberry made an effective argument against, but there’s a problem. Orrin Hatch (R-UT) has recordings out there and he wants a helping of broadcaster cash, too.

The musicians argued that all other audio media pay royalties to musicians, and broadcasters pay royalties to composers, and most musicians receive airplay royalties in most other parts of the world. Why are they singled out in the US, they want to know? Further, since they don’t have a royalty right in the States, foreign collection agencies also get to ignore them.

Newberry pointed out that the argument neglects to take into account the value of the free promotion provided by radio, which goes a long way to furthering a musician’s career. It’s not just airplay, either – broadcasters forward their careers via concert promotion, on air interviews, reviews and in many other ways. He also noted that most broadcasters are not rich, and that the money musicians are seeking will have to come from somewhere. What may happen is the abandonment music-based formats at many small stations. Dan DeVany, VP/GM of noncommercial WETA-FM in Washington DC agreed that the margins of many small community stations are too tight to take on this new burden.

Patrick Leahy (D-VT) and Arlen Specter (R-PA) asked probing questions of both sides, looking for common ground. Specter noted that he wanted to keep musicians going, but he wants to keep broadcasters going too, and asked for more information from both sides. Orrin Hatch (R-UT), on the other hand, has music out there, and he would like to receive the same royalties Lovett and Peacock are after. He said he would seek to address the matter with legislation, and advised broadcasters to come up with a proactive solution acceptable to all parties before that becomes necessary.

Lyle Lovett, Music First Coalition: Songwriters and performers rely on lots of different income streams in order to survive. Over the air, songwriter receives royalty, performer receives nothing. Radio profits from performers, who attract listeners and advertisers. They shouldn’t benefit from our work without paying. Performance rights exist in most other countries, but since US doesn’t have it, US musicians cannot even collect overseas despite producing 30%-50% of international content. Must find an answer that’s fair and square for all involved.

Alice Peacock, Music First Coalition: Vast majority of artists are not rich superstars. We expect to be compensated when businesses make a profit from our work. Glaring inexplicable exception to royalties is AM-FM radio. Attacks the broadcasting promotion argument. I wear Nike shoes and wear them all over the place, and you could say I was promoting Nike so I don’t need to pay for them. If I do that, it would be called shoplifting, and that’s exactly what radio is doing with their argument that they promote record sales. Pulled out a guitar and sang a song and followed by asking for a performance royalty on behalf of the vast middle class of musician.

Steven W. Newberry, Commonwealth Broadcasting Corporation, on behalf of the NAB: Owns and operates 23 radio stations in Kentucky. The existing model works. The promotional value of free airplay drives record sales. Most consumers first hear music they purchase on FM radio. Radio also promotes concerts, does interviews and exposes unknown talent. In 1999, Congress allowed royalties on satellite and internet due to the business model which often involves subscriptions. Doesn’t understand why the recording industry is biting the hand that feeds it. The dramatic increase in the cost of running a radio station this will cause will affect stations in every state. What does a broadcaster do? Increase ad rates? Switch to a non-music format? The system has worked for the music industry for years and there’s no justification for changing it now. Congress has long recognized this mutually beneficial relationship.

Dan DeVany: VP/GM, WETA-FM Washington: Just switched noncom format to Classical. Also opposes the imposition of new fees. Would constrain local broadcasters. When commercial WGMS-FM abandoned the format, WETA took on as a local public service. Budgets are built on public funding, mostly from voluntary listener donations. We’re one of many community stations. Royalty would be an onerous burden on stations already struggling to maintain razor thin operating margins. Payment would be difficult for WETA and possibly impossible for smaller stations. Artists do need to be fairly compensated, and I say this as a former professional musician. We believe our free exposure helps musicians. Urges senators to consider the effect on small, community-based broadcasters.

RBR/TVBR observation: The big piece of information we want to see is exactly how much of this money would go to artists and how much to corporations. Are broadcasters being asked to come to the aid of a lone folk singer with a guitar or a multinational corporation headquartered on foreign soil? Unfortunately, nobody from a major label was there to describe to Hatch what his cut would be.