By Kevin Parks
Leydig, Voit & Mayer
Another year has passed, and another version of the Performance Rights Act (H.R. 848; S. 379) has failed to become reality. The legislation is the recorded music industry's latest effort to eliminate the "broadcasters' exemption" in existing copyright law, and create a "public performance right" in sound recordings that would apply to radio broadcasting of pre-recorded music.
The tug-of-war between those who would pay (radio broadcasters, represented by the powerful National Association of Broadcasters) and those who would benefit from the new revenue stream (the record companies and recording artists, represented by the Recording Industry Association of America) goes back to the beginnings of the broadcasting and recorded music industries.
Regarding performance rights, sound recording copyright owners have long been at a disadvantage compared with music publishers and songwriters, who own separate copyrights in underlying songs ("musical works" in copyright parlance) and have enjoyed public performance rights for more than 100 years.
Through collecting societies such as ASCAP and BMI, publishers and songwriters have reaped billions in royalties based on the public performance of their musical works through traditional radio, other broadcast media, and in many other public forums and venues.
In stark contrast to songs, however, no public performance right has been attached to sound recordings. Thus, having a hit "song" on the radio means significant public performance royalties for songwriters and publishers, but music labels and recording artists share none of that wealth. The recording industry has worked to eliminate this disparity since the 1920s, but its efforts have been frustrated by the politically powerful broadcast industry, which insists that its relationship with labels and artists is based on a fair trade: "free music" in return for the "free promotion" provided by radio airplay, which drives consumers to purchase recordings and attend concerts.
Broadcasters have long maintained that requiring the payment of performance royalties for sound recordings would improperly disturb this historic, "symbiotic" relationship between the industries.
In the early 1990s, the major record labels again pressed their case in Congress, arguing that new digital music broadcasts were more easily captured and kept by listeners, "replacing" instead of "promoting" music purchases, to the detriment of labels and artists. A performance royalty was needed, they said, to counteract this new technological reality.
These arguments succeeded, and in 1995 Congress recognized a public performance right in sound recordings for the first time. But the right applied to "digital audio transmissions" such as Internet webcasting and satellite radio only; the exemption for traditional, terrestrial radio broadcasting stayed in place. More recently, labels and artists have agitated for broader performance rights. Legislation was introduced in 2007, and again with the most recent bills in 2009.
Positioning the issue as a matter of artist rights (rather than a music label income stream), the RIAA has drawn dramatic comparisons between songwriters who, with a full performance right, can retire with royalties as their annuity, as opposed to recording artists who, without this right, must continue to tour "until they die."
The NAB counters with its "free music for free promotion" refrain, coupled with emotionally charged rhetoric calling the proposal a "tax" on broadcasters, imposed at the behest of "greedy," "foreign-owned" record labels that have failed to adapt their business models to the digital age.
These arguments echo in the halls of Congress as parades of recording artists, and label and radio executives testify on the future of music and radio.
The House Judiciary Committee sent H.R. 848 to the full House in May 2009, and in an Aug. 4 Senate Judiciary Committee hearing legislators strongly suggested that the broadcasters' "promotion" argument has lost currency.
The fact that the United States is one of only a handful of countries that do not fully recognize public performance rights for recorded music (including North Korea, Iran and China) has become something of a national embarrassment.
As a practical matter, this policy prevents American labels and artists from sharing in reciprocal payments from other countries.
Moreover, technology continues to shape a music business in which the decline of physical sales places more importance on "access" to broadcast media as the major component of music consumption.
In this environment, it seems inevitable that expanded performance rights for sound recordings will ultimately be established. At that point, the debate can shift to the proper amount of the performance royalties, and to establishing rate parity across broadcasting platforms - webcasting and satellite transmissions, as well as traditional radio.
Here's hoping 2010 will be the year the United States eliminates the archaic broadcasters' exemption, and joins the international community by broadening its recognition of performance rights in sound recordings.