Gordon Smith 2019

With no bill to mandate a performance royalty introduced in this session of Congress, and Capitol Hill consumed by Democrats’ efforts to impeach the president, the radio royalty issue remains in limbo for the time being. A much larger immediate threat to the industry has to do with the Justice Department’s examination of whether the ASCAP and BMI consent decrees should be tossed out. This could have weighty consequences—the two performance royalty organizations for songwriters and music publishers control 90% of music in the U.S. The outcome will impact how their music is licensed to radio and other outlets.

With Assistant Attorney General Makan Delrahim expected to reach a decision by the end of the year, NAB President & CEO Gordon Smith says it’s an issue that the NAB is taking seriously. “If there is not some architecture to replace how you license music, what could happen is truly the Wild West and chaos,” he says on the Inside Radio Podcast. Smith says it's important to remember that the DOJ already looked at the decrees three year ago “and concluded these have a durable and enduring public value to make sure that everyone who has an interest in licensing music plays fair and does not have monopolistic power in dictating how this is to be done.” When it passed the landmark Music Modernization Act last year, Congress made clear that it plays a role in this and wants to make sure there is a structure “that is fair, and that people are not left high and dry wondering how, and if or when, they can play music.”

Smith says Delrahim promised him personally that he’ll include Congress and “has been solicitous of my views and those of others.” Should Delrahim decide to toss the decades-old decrees, a court would have to agree to allow him to do that. It’s an issue that is top of mind for Smith, who is marking his tenth year at the NAB. “We’ll just keep using all the tools we have to protect our members, and that includes the Administration, the Congress and the courts.” Meanwhile, Smith has also suggested radio is partners with ASCAP and BMI—and he could see a new deal that would be built off the possibility of a new federal law getting passed to accomplish much of the same goals. While the NAB is open to new ideas on a licensing structure, he notes that “several of the ideas that have been looked at create monopolistic powers for certain interests in the licensing process. That’s why Congress to date has said these consent decrees are still working and they provide predictability.”

As for a performance royalty for radio, Smith says with “huge majorities” in Congress rejecting the idea in principle, there is little appetite to pass legislation that would create one for radio. And while the NAB and Rep. Jerrold Nadler (D-NY), who heads the Judiciary Committee, have opposing views on the subject, Nadler’s “got his hands full with trying to impeach the President and my experience having lived through the Clinton impeachment process is that consumes all of the oxygen on Capitol Hill,” Smith says. “It’s the death penalty for the highest officer in the land,” and “little of the people’s business outside of the impeachment” gets done in this environment.

Smith believes there are some rational ideas for resolving the decades-old performance royalty dispute, hinting they could involve lower rates for streaming. “I think it’s fair to say that the labels are minting money now on the streaming rates that exist,” he suggests.  But any agreement would need to ensure the ongoing viability of broadcast radio and so far, radio and the record labels are no closer to reaching a deal than they were one year ago, Smith says. “There’s really nothing going on right now,” he surmises. “But there's nothing going on in terms of getting a terrestrial royalty passed either.”

 

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