A Tentative Breakthrough on Radio Royalties — With a Twist

For more than a year, Capitol Hill has witnessed a parade of musicians and radio disc jockeys lobbying on both sides of a bitter debate that has pitted the music biz against broadcasters.

It’s been over proposed legislation that would require that radio stations pay performers when their songs are played on the air — what has been regarded as a gaping loophole in copyright law.

Now both sides report substantial progress and the outline of a preliminary agreement, but it does have a new wrinkle: Included is a provision that would require new cell phones come with built-in FM radio chips. It’s a prospect that is not sitting well with a whole other group of lobbyists: consumer electronics manufacturers.

Nevertheless, the fact that there is a deal in the works is viewed as significant progress given that both sides have been engaged in discussions off and on since November, when Congressional leaders asked them to try to come up with some sort of compromise. Legislation, called the Performance Rights Act, had already passed out of the House and Senate Judiciary committees, but it has yet to reach the floor of either chamber.

According to an analyst report being circulated, the proposed terms would call for radio broadcasters to pay record labels and artists rates of up to 1% of net revenues, with smaller stations paying less based on a tiered system. That would cost broadcasters about $100 million per year, which would be perhaps hundreds of millions of dollars less than they would pay under the current legislation.

Their royalty payments would be offset by a 10% reduction in the royalty payments they already make for Internet streaming services.

The recording industry and musicians would get a performance royalty for the first time, and will also be able to pursue payments overseas. Many countries require broadcasters to pay performers when their songs are played, but do not compensate American musicians because of the lack of reciprocity.

The talks could still collapse, and the National Assn. of Broadcasters and the MusicFIRST coalition (which includes the Recording Industry Association of America) are in the process of briefing their members and monitoring reaction. And a revised bill still would have to pass the House and the Senate.

Marty Machowsky, a spokesman for MusicFIRST, called the preliminary agreement a “tremendous breakthrough.” Musicians and the record industry have fought, off and on, for years to obtain what they call a “performance right,” with legends like Frank Sinatra weighing in at certain points. But legislation has stalled.

There’s also the matter of FM radios in cell phones. Gary Shapiro, the president of the Consumer Electronics Assn., has told Ars Technica that it was a “backroom scheme” mandating “backward looking features.” He also said that the NAB and RIAA were acting like “buggy whip industries.” They vow to seek higher royalty payments — in an effort to get their share of the pie — if the FM mandate stays in. It is a sign that despite their opposition, they could be open to a deal.

In other words, there’s big movement on this long-running dispute — but it’s also gotten more complicated.

Update: While we’re at it, here’s a peek at one benefit of the lobbying campaign that musicians have een waging: They’ve been performing on Capitol Hill. Here Mickey Dolenz performs with several lawmakers in a June appearance. (Video via the Cleveland Plain Dealer.)

Mickey Dolenz lobbies for Performance Rights Act

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