House passes music royalty bill

Broadcast radio required to pay artists

By WILLIAM TRIPLETT

Musicians and record labels took a major first step toward winning a performance royalty as a House subcommittee passed a bill that would require such payment from broadcast radio.

But opposition in the full House and possibly the Senate could be significant.

Broadcasters already pay royalties -- $500 million annually, according to the National Assn. of Broadcasters -- to songwriters and music publishers. The Performance Rights Act would repeal a longstanding exemption for terrestrial radio on paying musicians and singers a royalty when their recorded work is played over the air.

Only broadcasters have enjoyed that exemption.

"All other music platforms -- satellite radio, Internet webcasts and cable television music stations -- pay artists and musicians to use their music," said Doyle Bartlett, exec director of the advocacy group MusicFirst. "It's only fair that terrestrial radio be held to the same standards."

The NAB has argued that a performance royalty would amount to a "tax," possibly as much as $7 billion that broadcasters would have to pay in total every year. The lobby has said that would be grossly unfair, particularly when airplay amounts to free advertising that drives record sales.

Rep. Howard Berman (D-Calif.), a co-author of the bill and chairman of the House Subcommittee on Courts, the Internet and Intellectual Property, said that only "a correlation, not causation" exists between record spins on the radio and sales.

"The approach we've taken to establish performance rights for musicians will provide broadcasters the opportunity to account for any promotional value they provide in the course of determining their royalty rate," Berman said.

Under the bill, medium-sized stations would pay "a negotiated and arbitrated rate," while smaller as well as noncommercial stations would pay a discounted rate, possibly even nothing.

The NAB remains unconvinced.

"Today's vote comes as a complete nonsurprise given the House IP subcommittee's history of support for the Recording Industry Assn. of America-backed tax on local radio stations," said NAB exec veep Dennis Wharton. "Despite today's action, there remains broad bipartisan resistance to the RIAA tax from members of Congress who question whether a punitive fee on America's hometown radio stations should be used to bail out the failing business model of foreign-owned record labels."

Wharton said 219 House members and 13 senators oppose a forced performance royalty.