FCC intervenes in US radio battle

September 2009


The row between artists, record labels and the radio industry over the legal loophole that allows FM and AM radio stations to play recordings without having to pay labels or performers in the USA continues to escalate with the Federal Communications Commission asking for comments on artist’s coalition musicFIRST complaint that radio stations were blocking adverts putting forward their side of the story and indeed refusing to play tracks by artists who support  current legislative efforts to close a long-standing loophole in copyright law. The loophole allows AM and FM radio stations to pay only songwriters when a song airs, not the performers or other rights holders on each track. It’s an unusual anomaly and not one that is relevant to Europe where a radio station must pay both the copyright owner of the song and the copyright owner of the sound recording – the latter collected in the UK by PPL (Phonographic Performance Limited) who collect for labels and artists. In the US satellite, cable and internet radio broadcasters do have to pay a royalty to the owners of sound recording copyrights (as do TV broadcasters).
The dispute follows on from a House Bill put forward by democrat Senator Patrick Leahey and Democrat Congressman John Conyers whose proposals require music stations that generate $1.25 million a year or less in revenue to pay up to $5,000 annually for the artist royalty. Larger stations would negotiate their payment, or have it determined by the federal Copyright Royalty Board.
In June 2009 musicFIRST filed a complaint with the FCC claiming that stations were refusing to air musicFIRST ads, threatening artists who support the effort to create a fair performance right on radio and continuing to run misleading ads produced by the National Association of Broadcasters – all in an effort to further their own private commercial interests at the expense of their public interest obligations. The current war of words extends to different names for the proposed levy – a performance fee according to performers – and a performance tax according to the broadcasters.

Advertisers last year spent $16 billion on the radio. “What is drawing them to the radio? The artists” said Duke Fakir, an original member of the Four Tops. “Many [aging] artists can’t even pay their hospital bills,” he added “Yet their music is played all over the world and they don’t get a penny — and advertising dollars are generated for their work.” The National Association of Broadcasters, which is leading the opposition and whose members include Clear Channel and CBS, says the measure would cost radio stations up to $7 billion a year and the Association points to the current economic climate saying that advertising revenue dropped to $16 billion last year from $20 billion in 2006. Revenues are expected to plunge further this year to $14.5 billion according to the Association.

The FCC have asked for comments by September 8th


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