A Royal Feud: To Pay or Not to Pay for Radio Play

Posted October 16, 2009 at 4:59pm

Musicians and broadcasters are gearing up for the next step in their high-pitched battle over royalties now that Senate and House committees have approved bills that would force radio stations to pay performers for playing their songs.

Both sides are expected to intensify their efforts, with musicians and record labels mustering support for a full vote on the measure in both chambers and broadcasters endeavoring to prevent the bill from progressing.

Although the proposal has been debated for years, it has now advanced further than ever before. Last week, the Senate Judiciary Committee approved the Performance Rights Act, which requires radio stations to pay royalties to performers. A similar bill was approved by the House Judiciary Committee earlier this year.

The MusicFirst Coalition, which includes artist groups as well as the Recording Industry Association of America, hailed the Senate committee action as unprecedented. Martin Machowsky, a spokesman for the group, said the coalition will be ratcheting up the lobbying effort to get the legislation up for full House and Senate consideration.

“Our next step is to work with our champions on the Hill,— he said, noting that “this is an issue that crosses party lines.—

The backers of the legislation include an unusual bipartisan mix. On the Senate side, the bill is supported by Sen. Patrick Leahy (D-Vt.), chairman of the Judiciary Committee, as well as a senior Republican on that panel, Sen. Orrin Hatch (Utah).

In the House, the measure was sponsored not only by John Conyers (D-Mich.), the liberal chairman of the Judiciary Committee, but also by GOP partisan firebrand Darrell Issa (Calif.), ranking member on the Oversight and Government Reform Committee. Rep. Howard Berman (D-Calif.) is also sponsoring the bill.

But opponents of the royalties legislation say they have more lawmakers on their side, particularly in the House. Dennis Wharton, the spokesman for the National Association of Broadcasters, said 251 House Members have signed a resolution opposing the payments. He added that 26 Senators have also expressed opposition.

The broadcasters are not going to let up their fight even though they lost the battles in two key committees, Wharton said.

“This is the No. 1 issue for radio broadcasters in the last 20 years,— he said.

Aiming to increase its clout with Congress, the NAB last month hired as its president former Sen. Gordon Smith, a moderate Republican from Oregon who sat on the Commerce, Science and Transportation Committee, which oversees broadcast-related legislation. Smith, who lost his bid for re-election in 2008, replaced David Rehr, known as an uncompromising Republican lobbyist.

The proponents and opponents of the royalties have waged expensive and high-profile campaigns on Capitol Hill.

In the first six months of this year, the RIAA spent $3.4 million on lobbying on royalties and other issues, according to disclosure reports filed with the Senate. The association’s lobbying team includes such well-connected firms as the Glover Park Group, Ogilvy Government Relations and DLA Piper.

During the same period, the NAB spent $5.8 million on lobbying. Among those lobbying for the group are the Breaux Lott Leadership Group, the Podesta Group and Covington & Burling, the firm where Smith set up shop before taking over the NAB.

The two sides have also sought to wow lawmakers with marquee stars. Sheryl Crow, Herbie Hancock and Dionne Warwick testified on Capitol Hill for the performance royalties. But the NAB has also brought in its own celebrities, including Tom Joyner, an African-American radio personality, to lobby against the royalties.

Musicians say they have historically been shortchanged by not being compensated by broadcasters, who do pay royalties to songwriters and producers. But Wharton argued that many of the royalties will end up in the pockets of record label companies, some of which are based in foreign countries.

The broadcasters also say royalties will bankrupt many radio stations. Under the legislation, royalties for the larger commercial broadcasters would be negotiated by a Copyright Royalty Board, a panel of three administrative judges appointed by the librarian of Congress.

However, the Senate Judiciary Committee also approved an amendment offered by Leahy to protect smaller broadcasters. Under a tiered fee schedule, radio stations with revenues of $1.25 million or less would pay flat amounts annually.

In his opening statement at last week’s Judiciary hearing, Leahy said the legislation would “end a glaring inequity in our intellectual property law that disadvantages American artists around the world, as well as here at home.—

The chairman concluded by encouraging broadcasters “to end their holdout and show some willingness to work with us and reach an equitable solution to this problem.—

But as of now, the two sides clearly are not singing from the same songbook.