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New Bill Would Force Radio Stations to Pay Artists for Airplay

Rep. Mel Watt (D-N.C.) has introduced legislation to require that broadcasters compensate artists and labels when their music is played over the airwaves, adding to the long history of efforts by the music industry to obtain such a “performance right.”

Watt, who is the ranking member of a House Judiciary subcommittee on intellectual property and the Internet, had indicated last month that he planned to unveil such a bill.

The effort by artists and labels to establish a performance right goes back decades — Frank Sinatra once championed it in a legislative push in the 1970s — but opposition from radio stations has been fierce. A bill seemed to make progress in Congress in 2009 and 2010, when it passed the House and Senate judiciary committees, but a potential compromise fell apart before the legislative session ended.

Watt’s Free Market Royalty Act will obligate AM and FM stations to pay performers when they play their songs over the air, something that digital and satellite services already do. Songwriters and publishers also are compensated for radio airplay.

Broadcasters have argued that the free airplay is a valuable promotional platform for artists, and that have been lining up supporters behind a separate piece of legislation, the Local Radio Freedom Act, to prevent such a plan to require payment for performance.

But they also have been pointed to recent agreements between artists and individual station groups, like Clear Channel, to provide such compensation and argue that the issue can be resolved by the private sector.

In a statement, Watt said that “those deals expose the unfairness and inadequacy of the current system and they strongly point out the need for a legislative solution that will apply market wide.”

His legislation would establish a performance right — meaning stations would have to compensate artists in some fashion — but it would “let the market decide” on royalty rates. It would be repeal an existing “compulsory license” which requires tat music be made available to broadcasters. It still would enable the sides to negotiate a a one-stop licensing rate, yet still make it possible for musicians to negotiate separately. The bill also retains requirements that artists retain a “fair share” of royalties and that they are paid directly through SoundExchange.

Ted Kalo, executive director of the MusicFIRST Coalition, a lobbying org of labels and artists, said that the bill “sends all parties back to the bargaining table to find common ground.”

The legislation also comes as streaming services like Pandora have argued that they are being forced to pay unreasonably high rates to artists and labels that threaten their business model.

“For webcasters who are lobbying Congress for the ‘Internet Radio Fairness Act’ by claiming that the current ‘willing buyer, willing seller’ standard doesn’t actually represent a fair market price, this bill would facilitate free market negotiations, which would indisputably arrive at such a price for music,” he said.

Update: To not much surprise, NAB opposes the legislation. The organization said in a statement that the market-based negotiations “demonstrate that this issue is already being addressed in the free market. This legislation would impose new costs on broadcasters that jeopardize the future of free over-the-air service.”

NAB also said that 171 members of the House and 12 members of the Senate have signed on as co-sponsors of the Local Radio Freedom Act.

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