Recording Academy Pushes For Radio Royalties At Star-Packed Awards Dinner


Attendees of Wednesday night’s Grammys on the Hill dinner in Washington, DC got to see star-packed musical performances while paying tribute to the evening’s honorees, who included Senators Chuck Schumer (D-NY) and Bill Cassidy (R-LA), and singer/songwriter/producer Pharrell Williams. But the underlying agenda of the night was to push the music industry’s slate of proposed bills to the several members of Congress in the audience. Three of the four pieces of legislation are new, but the fourth—now known as the American Music Fairness Act (AMFA)—covers an issue that has existed for almost a century: royalties for music played on the radio.

Grammys on the Hill is a two-day program that the Recording Academy, the organization behind the Grammys, puts on each year to woo legislators to the music industry’s legislative agenda. The dinner event is the highlight of the two days; each year it features awards given to elected officials who have helped the industry in the past and musicians who have been strong advocates for musical creators’ rights. This year’s two senatorial awardees were recognized for their efforts in passing bills such as the Save Our Stages (SOS) Act, which allocated part of the government’s COVID relief package to operators of performance venues that had to close during the pandemic.

The two senators were also recognized for their efforts in helping evacuate the students, faculty, and staff of the Afghanistan National Institute of Music (ANIM) from Kabul after the Taliban retook the city in 2021; ANIM’s Director, Dr. Ahmad Sarmast, also spoke at the dinner in support of the school—now relocated to Portugal—and of the restoration of women’s and musicians’ rights in Afghanistan.

In between the honorees’ speeches and musical performances by artists including Maggie Rose, JP Saxe, and Nile Rogers, Recording Academy CEO Harvey Mason Jr. addressed the roughly dozen members of Congress in the room with a list of legislative priorities for the music industry. The Recording Academy differs from other advocacy organizations in Washington, such as the Recording Industry Association of America (RIAA) and National Music Publishers Association (NMPA), in that it represents a broader swath of music-related interests than those organizations.

Three of the four pieces of legislation that Mason promoted are new. The RAP (Restoring Artistic Protection) Act seeks to bar song lyrics from being used against songwriters and performers in court cases; such tactics have been used particularly against hip-hop artists. The HITS (Help Independent Tracks Succeed) Act would enable artists to deduct the costs of producing a recording as a business expense from income tax in the year that the recording was made instead of having to amortize them over the economic lifetime of the recording; this would make it easier for independent artists to afford to make recordings by lightening their short-term financial burdens and simplifying their tax accounting. And the TICKET (Transparency in Charges for Key Events Ticketing) Act would require ticketing companies such as Ticketmaster to disclose hidden fees in prices for tickets to music and sports events, in much the same way as a proposal from the Biden administration last year would require airlines to disclose extra fees in prices for plane tickets.

The fourth piece of legislation that Mason touted on Wednesday night is the only one without a clever reverse-engineered acronym as well as the one that addresses an issue that is several decades old: the American Music Fairness Act (AMFA). AMFA would require radio stations to pay record labels and recording artists for airplay of music.

Those who don’t follow the music industry closely might wonder why AMFA exists—why radio stations don’t already pay for their use of music. The answers to this question come from both the history and geography of the music industry.

First, it’s important to understand that radio stations do pay for music—in part. Radio stations are legally allowed to play whatever music they want without getting advance permission from rights holders, and they pay royalties to performing rights organizations (PROs) such as ASCAP and BMI. But those royalties go to songwriters and music publishers, not to recording artists and labels. So, for example, if a radio station plays Doja Cat’s 2022 cover of Hole’s “Celebrity Skin,” then Courtney Love and her cowriters get a royalty for the composition, but Doja and her label (RCA) get nothing.

Historically, radio’s role in the music business is arguably different from today. In the pre-digital era, radio was the most important way to promote music—to get people to buy it on shellac, vinyl, tapes, or CDs. There was a direct causal link between airplay and sales. But with the rise of digital music technologies and services in the 2000s, the clout of AM/FM radio as a promotional vehicle began to diminish, and those digital services—which also promote, and often displace, record sales—do pay royalties to recording artists and their labels. Legislation enacted in the 1990s has ensured that digital radio services, such as Pandora, iHeartRadio, and SiriusXM satellite radio, pay these royalties; and interactive services like Spotify and Apple
Music pay them as well. But AM/FM broadcasters still don’t pay them.

The United States is one of a very small number of countries that don’t pay these royalties, which are known in legalese as performance royalties on sound recordings; others include Iran, Rwanda, and North Korea (China was on this list until recently). All other countries pay recording artists and labels for airplay.

Yet this issue doesn’t just date back to the 2000s when digital music services first appeared; it dates back to the 1930s. At that time, only musical compositions (think sheet music) qualified for copyright protection under U.S. federal law; sound recordings (records, tapes, CDs) didn’t. It took until the Sound Recording Act of 1971 for sound recordings to qualify for copyrights, and even then, they didn’t get a public performance right, meaning that no permission or royalties were required for radio airplay.

The pushback against performance rights in sound recordings is the same today as it has been throughout the twentieth century; it has to do with the fact that the music industry is concentrated in just a few states while the radio broadcasting industry isn’t. The music business is based primarily in three locations: NYC, the Los Angeles area, and Nashville. Thus the sponsors of bills such as AMFA are invariably senators and Congress members from New York, California, and Tennessee. (And these bills are almost always bipartisan; for example, AMFA’s Senate cosponsors include Marsha Blackburn (R-TN) and Dianne Feinstein (D-CA).)

But the 15,000 licensed AM/FM radio stations in the U.S. are located all over the country, and thanks to FCC regulations dating back decades that capped the number of stations that a single company could own, most stations are owned by small-to-medium-size companies in disparate locations. Thus, whenever legislation such as AMFA is proposed that would cost radio stations money, Congress members from dozens of states line up to oppose it. The National Association of Broadcasters (NAB), the radio industry’s lobbying organization, has always succeeded in portraying this legislation as an unfair burden on small businesses, even though the AMFA would only require stations that make less than $1.5 million in annual revenue to pay small flat fees instead of percentages of revenue in royalties.

In fact, AMFA is far from the first time in almost a century that the music industry has attempted to plug the AM/FM radio royalties loophole; it’s at least the fourth. And there’s not much reason to think it will succeed this time. There are two paths to a radio royalties bill becoming law. One is that the record industry finds some bigger bargaining chip to extend to broadcasters in exchange for getting the law passed; already it has made concessions on issues such as royalty payment and reporting requirements for small stations.

The other development that could result in a bill such as AMFA finally passing is radio continuing down its path of diminished relevance to the music industry. AM/FM radio is still a highly popular medium, especially in automobiles. But its penetration has started to sag now that it’s easier than ever to get information and entertainment in cars through smartphones and other mobile devices. And people’s reasons for listening to radio are drifting further and further away from music: for example, a recent survey from the consulting firm Jacobs Media found that the top three reasons why people like radio are not the music but “Easiest to listen to in car,” “DJs/hosts/shows,” and “It’s free”; and that “DJs/hosts/shows” pulled ahead of “Favorite Songs/Artists” in 2019. The risk is that if radio stations have to pay royalties for music airplay, they’ll play less of it; and trends like those found in the Jacobs Media survey may hasten that outcome.

In other words, the music industry may not get sound recording royalties for radio play until it doesn’t matter much anymore. And many more Grammys on the Hill dinners may take place before that happens.

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