PRA fray day in Judiciary


The Senate Judiciary Committee, under pinch-hitting chair Diane Feinstein(D-CA), had broadcasting on the defensive in yesterday’s hearing on the Performance Rights Act. Commonweath Broadcasting’s Steve Newberry did his best to explain the broadcast opposition to the matter and fend off question after question. NABOB’s Jim Winston used his five minutes of mic time to urge Judiciary investigations into lending practices and Arbitron’s PPM technology. And many senators used the occasion to demonstrate their failure to grasp the ins and outs of the issue.

Sheila E led the charge for musicians, and was supported by indy label exec Marian Leighton-Levy, Real Networks exec Bob Kimball and academic Ralph Oman.

Some of the testimony didn’t seem to add up. For example, Sheila E noted that her 74-year-old father played in the Santana band for a time and would stand to gain some income from airplay still taking place – however, she did not take into account that he would be in among the gigantic crowd of side musicians getting a mere 5% of the PRA take.

Kimball argued for parity between delivery systems, not taking into account all of the public interest and other regulatory burdens placed on broadcasters alone, nor broadcasters’ lack of a subscription income stream. At the same time, he probably had many broadcasters nodding in agreement when complaining about negotiating tactics used by SoundExchange.

Leighton-Levy was arguing on behalf of musicians in her company’s catalog who get very little airplay in the US – many of them long gone and of historical importance (she said they are played overseas, but did not quantify foreign airplay).

Newberry focused on the tough economy and how it’s beating up radio, and the beneficial effect airplay has on sales of recorded music, not to mention concert tickets and other related items. He said the true value of airplay must be thoroughly studied before bringing a new and harmful law crashing down on radio – and he knows the airplay is valuable because record companies spend millions of dollars and countless hours clamoring for it.

As for incomprehensible senatorial statements, Patrick Leahy (D-VT) appeared (he was conflicted due to the Sonia Sotomayor SCOTUS floor debate) and cited local musicians in Vermont that are unknown and deserve compensation for airplay – citing the exact type of struggling musician that has almost no chance whatsoever of benefitting from PRA, yet are most often chosen as examples by the recording companies and their supporters.

John Cornyn (R-TX) dropped in with the novel concept of a recorded music do-not-play list. If an artist thinks airplay simply isn’t worth it, the artist can demand it be kept off the air. That concept took everybody by surprise and was quickly shown to be unworkable in numerous ways.

The most balanced questioning came from Al Franken (D-MN), fresh off a stint at struggling Air America, which gave him the perspective to see both sides. Sheila E told him she at least wanted to be able to negotiate with broadcasters, saying, “I depend on radio – I really do, and I want to sit down and talk with them. There isn’t a partnership, there really isn’t.” Franken was the one to finally put the final nail into the do-not-play list coffin, saying it clearly would not work.

The finest example of senatorial incomprehension, courtesy of Feinstein, is prominently included in our observation.

Testimony summaries:

* Sheila E, Grammy Award-winning Artist, On behalf of the MusicFIRST Coalition, Sherman Oaks CA: Representing hundreds of thousands of musicians seeking fair compensation. Why is traditional broadcast radio allowed to profit from music without compensating artists as in other countries. With internet paying, radio’s exemption is intolerable. Artists should be compensated like all American workers. Artists love to have radio airplay, but they all love to play live – and get paid. They love to sell recordings – and get paid. NAB is not the musician’s friend. Friends don’t let friends work without compensation. Disturbed by claims PRA would hurt minority stations, because minority artists deserve compensation. Her 74-year-old dad played with Santana, so he will be compensated – finally – whenever Santana oldies are played on the radio. Gets emotional talking about bringing music to children.

* Bob Kimball, Executive Vice President, Real Networks, Seattle WA: Creator of steaming tech and a music distributor. Wants parity to foster competition between satellite, internet and radio with one single uniform standard. Wants the same caps for small streamers similar to those being offered to small radio stations. The Copyright Act should not decide technical winners and losers. Wants royalty arbitration standard put to use, which takes into account artists, distributors and the public. Argues that SoundExchange has too much power based on its control of critical information.

* Marian Leighton-Levy, Owner, Rounder Records, Burlington MA: A lot of important historically-significant recordings in catalog that is critically-acclaimed but not destined to generate hits and significant airplay. PRA is not just about superstars and hits. Broadcasters excuse about promoting music maybe made sense 80 years ago, but it is no longer the sole method of promoting music. Value proposition offered by broadcasters doesn’t add up. Says her music may not get much play in US but is heard a lot overseas, but Rounder receives no cash due to lack of reciprocity. Continually amazed at broadcaster misinformation campaign. Battle for royalty goes back to 1936.

* Steve Newberry, Joint Board Chairman, National Association of Broadcasters, President and CEO, Commonwealth Broadcasting Corporation, Glasgow KY: PRA will upend local broadcasting as we know it. Challenging situation will deteriorate further if this is enacted. But beyond the economic realities, there is compensation. Local radio is the leading popularizer of new and old music. $2.4B in music sales generated by radio, and more money generated by ticket and paraphernalia sales. Radio stations inundated by calls asking for airplay. Record companies send gold and platinum albums to radio stations thanking them for airplay. Record labels spend thousands inviting local PDs to private concerts. 18.6M satellite subs. Internet radio has 42M listeners, many paying for a subscription. Radio has 235M listeners getting it for free. Before committee passes potentially devastating legislation, it should study radio’s true worth.

* Ralph Oman, Adjunct Professor, George Washington University Law School, Washington DC: Déjà vu all over again for me, dating back to 1975. Many attempts to do this, none have ever made it to the finish line. As a matter of property rights, creator/holder of copyright should be paid for use of the material. In no other realm can one group take another’s intellectual property and use it. Broadcasters think they’re doing artists a favor by promoting their music, but artists should be the judge of that. Promotional value cannot justify free use, instead, it should be a factor in determining royalty rates. Standard should be based on fair market value.

* James L. Winston, Executive Director and General Counsel, National Association of Black Owned Broadcasters Inc., Washington DC: Broadcast industry is portrayed as industry making fat profits. Truth is that most minority broadcasters are struggling to survive. NABOB wants investigations of lenders and Arbitron already. Minority broadcasters are having trouble meeting loan covenants from hedge funds. Refusing to offer workout arrangements to allow minority broadcasters to skate past current economic problems. Or, would like help from Treasury to secure credit. Monopoly Arbitron’s PPM showed huge audience declines for minority broadcasters threatening survival of stations/companies. Arbitron is being investigated by three AGs and FCC, and has not been accredited by MRC. These are antitrust issues for this committee to consider.

RBR/TVBR observation: We’ve heard a lot of goofy questions during our time covering Congress, but the trophy for single goofiest question now has to be transferred to Feinstein. Apparently shooting for a classic gotcha, she said Newberry doesn’t want to pay musicians, but he enjoys getting paid by cable to have his stations carried, right? Uhhh, Senator – cable systems generally do not carry radio stations.

Sheila E continued the tradition of praising radio at times, even while pressing the case for a performance royalty. Yet, once again, nobody bothered to wonder even for a moment why it is that performers talk about radio in glowing terms but so often are at war with their labels.

Nobody bothered to mention the fact that most industrialized countries that pay performance royalties are geographically small compared to the US, and in almost all cases attribute a great deal of listening to state-owned radio stations – meaning that royalties are not coming from small local entrepreneurial businesses but in fact are actually a form of government subsidy to musicians.

And not one attending senator was entirely supportive of broadcasters (although not many showed up today). The House Judiciary Committee is stacked against broadcasters as well, although they’re doing well collecting support among the general House rank and file. We hope that will be the case in the Senate as well.