Walden: Industry Should Resolve Performance Royalty Debate, Not Congress
House Communications Subcommittee Chairman Greg Walden, R-Ore., said Wednesday he didn’t think there is enough political will for lawmakers to tackle music royalty performance rights this session. He'd prefer an industry-based solution rather than congressional intervention, he said: “Frankly you see a stalemate up here on these issues, and so it really is better done out in the marketplace,” he told us following a subcommittee hearing on the future of audio. He and other subcommittee members praised a recent Clear Channel agreement to pay performance royalties to the Big Machine Label Group and its artists (CD June 6 p12).
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Walden said he’s “intrigued” by Clear Channel’s agreement to pay a percentage of music advertising revenue to Big Machine for both terrestrial and digital broadcasts. “I think it’s obviously precedent-setting and they may find a way here to lead both industries into agreements that resolve this issue so Congress doesn’t have to,” Walden told us.
Commerce Committee Chairman Fred Upton, R-Mich., was bullish on the Clear Channel/Big Machine deal: “It looks to me like an agreement that might break the logjam that has plagued this space and help advance online radio. Best of all it did not require legislation or regulation.” Subcommittee Vice Chairman, Lee Terry, R-Neb., said he was “intrigued” by the announcement but wanted to understand it better “before I have more enthusiasm.”
Commerce Committee Ranking Member Henry Waxman, D-Calif., pressed lawmakers to intervene and stop the “grossly unfair” performance royalty exemption for broadcasters. “There is no reason in today’s environment that over-the-air broadcasters should be able to play music without compensating the artists,” he said.
RIAA Chairman Cary Sherman is “pleased” to hear about the Clear Channel agreement, and “it is time” for the NAB to begin working for an industry-wide solution, he said. But the Clear Channel agreement does not change NAB’s “strong” opposition to a congressionally mandated performance tax on broadcasters, said Steven Newberry, president of the Commonwealth Broadcasting Corp. Imposing new royalty rates on broadcasters creates a “financial disincentive” that would prevent the success of radio stations, he said on behalf of NAB.
Pandora founder Tim Westergren said broadcasters’ failure to pay performance royalty fees “amounts to a subsidy of entrenched radio media” that “stifles innovation, discriminates against the Internet and adversely affects consumers.” National Music Publishers’ Association CEO David Israelite said lawmakers must find a way reform the “outdated and inefficient” licensing system and ensure that future business models fairly compensate songwriters.
CEA President Gary Shapiro said he’s “troubled” by radio broadcasters’ demands that Congress “forcibly intervene” in the marketplace and require that analog radio receivers be installed into a host of digital devices, including mobile phones. He urged lawmakers to “ignore these self-interested pleas” and said CEA opposes any effort to require a government study on FM chips. “Taxpayers should not be spending money to study mandates,” he said. CTIA Vice President Christopher Guttman-McCabe also urged Congress to reject the radio industry’s call to implement FM chips into smartphones. “The decision to offer FM capability, or not, should be driven by consumer preference, not government fiat,” he said.
Subcommittee Ranking Member Anna Eshoo, D-Calif., said she opposes all “technology-specific” mandates, including FM radio chips, and urged her colleagues not to hinder the growth of new and innovative technologies. She touted her sponsorship of the Creativity and Innovation Resolution (H.Con.Res.42) which asks Congress to oppose any mandate for the inclusion of terrestrial broadcast radio tuners in the manufacture or sale of mobile devices.
Broadcasters aren’t seeking to mandate the inclusion of radio chips in mobile devices, said Jeff Smulyan, president of Emmis Communications. He said the voluntary inclusion of radio chips into smartphones can offload traffic from music streaming sites, deplete batteries less than online streaming and offer public safety information in time of emergencies. Emmis has worked with iBiquity Digital and NAB to encourage wireless carriers to build HD Radio into smartphones by year-end (CD April 17 p10). Local radio remains “irreplaceable” as a means to inform the public, he said, and wireless alerts aren’t “sufficient” to inform Americans during an emergency situation.
NAB spokesman Dennis Wharton separately confirmed that broadcasters are not seeking a radio chip mandate. “Shapiro continues to spread false information [on] Capitol Hill,” Wharton said. “We think that from a public safety perspective, it makes sense for cellphone carriers to voluntarily include or activate radio chips. Over the air radio is a standard feature in cellphones all over the world. Only in America is this feature denied to listeners."
There’s little support among lawmakers for legislation that would create a performance fee for broadcasters, added Wharton. He said 21 senators have cosponsored an anti-performance tax resolution, the Local Radio Freedom Act (S.Con.Res.7) and 174 House members signed on to its companion resolution, (H.Con.Res.21). “Broadcasters compensate musicians every day by exposing our 270 million weekly listeners to music,” Wharton said. “There is no other platform that comes close to the promotional value of free radio.”