As legislation that would enact a variety of changes to federal laws governing how music is licensed and songwriters are paid now in its final stretch on a journey to the President’s desk, some in the music community are returning to a familiar battlefield. There’s already conversation of resuming the fight to secure a performance royalty for AM/FM airplay.
“The music community has in no way stopped fighting for a terrestrial radio performance right,” wrote Chris Israel, executive director of the musicFirst Coalition in a Hyperbot op-ed this week. As the creative community is on the doorstep of several long sought-after changes in copyright law, he said the fight for an AM/FM radio right continues. “The music environment is changing fast and terrestrial radio needs to find its place and define its future. We believe this must be done in conjunction with music creators, and this in turn means radio will have to finally accept compensating artists as equals and partners,” Israel wrote.
The issue of what broadcasters do – and do not pay – was among the final sticking points to the Music Modernization Act (S. 2823), which passed the Senate on Tuesday. Among several complaints, SiriusXM Radio argued it wasn’t fair that digital services, like satellite radio and streaming services, would be required to pay royalties on songs recorded prior to Feb. 15, 1972 while AM/FM radio wouldn’t. And because the bill’s sponsors had taken steps to use the so-called “hotlining” process, and SiriusXM had reportedly secured the support of two Senators, the satcaster could have derailed the bill’s passage.
But under a deal worked out on Tuesday, SiriusXM agreed to drop its opposition in exchange for an agreement keeping the satellite radio company’s current royalty deal until 2027, or five years beyond its previous 2022 expiration date. The Copyright Royalty Board increased SiriusXM’s music royalty rate by 41% last December after it announced the company would be required to pay 15.5% of gross revenue, up from its previous 11.5% rate. Yet assurances no additional rate hikes could come within the next five years would give SiriusXM more certainty about its cost structure. SiriusXM also reportedly pledged not to appeal the CRB’s ruling. And in a move that could help put the company back in good graces with musicians, some of whom had threated to boycott SiriusXM just days earlier, the deal also provides artists with 50% of performance royalties from SiriusXM for pre-72 sound recordings.
Mitch Glazier, president of the Recording Industry Association of America (RIAA), said the Senate’s unanimous approval of the 185-page bill was a “herculean feat.” And while the amended bill still requires a second House vote and President Trump’s signature before it becomes law, Glazier said it would bring a “a brighter tomorrow” for both past and future generations of music creators. “As legendary band the Grateful Dead once said in an iconic pre-1972 song, ‘what a long strange trip it’s been.’ It’s been an epic odyssey, and we’re thrilled to almost be at our destination,” he said. Supporters hope legislative loose ends will be completed by the time Congress goes into recess for the mid-term elections.
Radio Still Talking To Music Community
In the meantime, the music industry continues to have informal conversations with the National Association of Broadcasters about ways to reach a similar compromise on the AM/FM royalty debate. NAB president Gordon Smith has said he remains optimistic some agreement can be hatched, most likely tied to what radio pays for streaming. “There’s room for common ground and a settlement of the disputes between us and the performance community,” Smith said in a recent television interview. The focus is on figuring out how to link the introduction of an on-air royalty to addressing what Smith said are the “unaffordable” rates already being paid by broadcasters to simulcast their stations online. “There’s an opportunity to do a deal,” Smith said.
That’s a position that Neil Portnow, president of The Recording Academy—sponsor of the Grammy Awards—has also shared publicly. During a congressional field hearing earlier this year, Portnow said the two industries are having “productive discussions” but said he believes Congress needs to keep the pressure on.
But what hasn’t changed, according to Smith, is the NAB’s position remains that the unilateral adoption of a performance royalty on over-the-air programming would “severely damage radio” to the point where some stations may disappear from the dial. Such a move seems unlikely in the near-term. Broadcasters have secured what Smith called a “big bipartisan majority” in the U.S. House opposing a fee on stations. The Local Radio Freedom Act secured a majority last December and it has continued to add supporters. The latest tally shows 227 members have gone on record backing the resolution, in addition to 28 in the Senate.
It’s a big reason why SiriusXM CFO David Frear told an investor conference earlier this month he was doubtful a radio royalty will ever be achieved. “The NAB is an incredibly powerful lobby,” he said. “And I think it’d be very difficult to get the votes in Congress to assess a performance royalty against AM and FM radio.”