According to a report from the Government Accounting Office prepared for Performance Rights Act supporter Arlen Specter (D-PA), in the past royalty proposals have included an assessment of the damage they might have on involved industries. Under PRA, this would no longer be a consideration.
Copyright setting has traditionally involved consideration of four elements, according to GAO: (A) maximizing the availability of creative works for the public; (B) providing a fair return to the copyright holder; (C) assessing how copyright holders and users figure into business results; (D) and to minimize disruption of industries bearing a new royalty expense.
Let’s look at (C) in detail. The exact wording is this: “to reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression and media for their communication.”
GAO has not yet come out with a report reflecting the value of broadcast promotion of recorded music, but traditionally, it has always been seen as a fair exchange of content for promotion between the two industries.
Nevertheless, lacking an assessment of broadcasting’s contribution to the success of recorded music, PRA plunges forward and takes assessment of plank (D) out of the mix. It reads: “to minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices.”
Looking at the application of plank (D), GAO noted that it may have contributed to lowering copyright rates for satellite audio service.
GAO said, “It is unclear how the proposed removal of the fourth standard from the section 801(b)(1) standards would impact future rate-setting proceedings.”
RBR-TVBR observation: PRA was drafted without waiting for the GAO’s report on the true value of free radio promotion of recorded music. Instead, it includes a naked declaration that royalties will be set and imposed not only with apparent disregard for the value of broadcasters’ traditional role in promoting music, but further without regard to broadcasters’ ability to absorb the new expense. Unbelievable.
Maybe some members of Congress are unclear as to the effect eliminating consideration of harm to involved industries will have. But it’s pretty clear to us what the effect will be. And it won’t be pretty.
Still to come is the comprehensive report on PRA requested by the House Judiciary Committee under Chairman John Conyers (D-MI). The preliminary report in February and a brief update in June raised more questions than they answered.
RBR-TVBR request: Get involved it is your business. What’s your take? RBR-TVBR wants to hear from the radio industry. What do you think of the NAB negotiations with the record labels? Feel free to post a brief comment below and/or send us your thoughts for publication to [email protected]. Please include your name, title and company affiliation.