(Karl Heinz Spremberg)
The Fair Play Fair Pay Act of 2015 (FPFPA), introduced as HR 1733 on April 13, is the latest congressional effort to rebalance the economics of music. Unlike satellite radio, digital broadcasters and even an AM/FM station’s own online simulcast, U.S. terrestrial radio is exempt from paying royalties on public performances of sound recordings. The legal fiction separating analog and digital plays creates a pay disparity for musicians.
Radio stations have to pay songwriters and music publishers, but not recording artists and labels. FPFPA, co-sponsored by U.S. Reps. Jerrold Nadler, D-New York; Marsha Blackburn, R-Tennessee; John Conyers, D-Michigan; and Theodore Deutch, D-Florida, emphasizes “platform parity” for rights holders. After all, the bill’s supporters emphasize, why should it matter to the vocalist who made the song famous if a listener experiences a broadcast performance over the air instead of over the Internet?
Public confusion over the flow of money in music licensing is rampant. Recently, the Future of Music Coalition (FMC), a national nonprofit music advocacy and education organization, published results from its Music and Money Quiz. Over one-third of respondents did not know who was paid for a terrestrial radio broadcast—choosing, incorrectly, the entire set of standard rights holders in the music industry.
How did this happen? When recordings gained copyrightable status under U.S. law in the late 20th century, radio plays were viewed as marketing for physical record sales. Both the writer and the performer of a recorded song were paid for the sale of music, and still are. But as the public’s experience of purchasing music continues to be increasingly intangible, the music industry is re-examining the fair market value of a single song, wherever it is heard.
In response to more than a decade of industry upheaval and multiple efforts by the music industry to battle piracy and enforce copyrights in the digital age, House Judiciary Committee Chairman Bob Goodlatte, R-Virginia, announced the beginning of a comprehensive review of U.S. copyright law in 2013. There have been more than 20 hearings and scores of witnesses from all interest groups, and the U.S. Copyright Office has issued reports and recommendations on topics including small claims copyright court, music licensing, and electronic recordation.
Some of the resulting findings have surfaced in past legislation proposals, including (in the 113th and 114th Congress alone) the Protecting the Rights of Musicians Act, the Copyright and Marriage Equality Act, the Songwriter Equity Act, the Better Online Ticket Sales Act, the Allocation for Music Producers (AMP) Act and the Respecting Senior Performers as Essential Cultural Treasures (RESPECT) Act. FPFPA pulls together a large handful of reforms in one package: Compensation for performers and sound recording copyright owners for AM/FM radio play; compensation for all rights holders for digital play of pre-1972 sound recordings; platform parity rate reform and fair revenue splits in noninteractive digital play; and compensation for producers and engineers for digital play.
Opponents of FPFPA include the broadcasters, whose business model will need to change substantially should the bill be passed into law. Money to pay performers fair market value will need to come from somewhere, and terrestrial radio will need to compete more directly with Pandora and Sirius XM. Directly in response to recent proposed terrestrial radio legislation, the Local Radio Freedom Act has been introduced two years in a row as a nonbinding resolution in both chambers to preclude any new performance royalties. The National Association of Broadcasters fears that FPFPA and similar reforms will hurt jobs, especially those in small business. To address that issue, FPFPA provides allowances for small or public broadcasters. For example, an independent commercial station with annual revenue under $1 million would pay a capped annual royalty of $500. Individual public broadcasting stations would pay $100, and religious broadcasters would be exempt regardless of size.
FPFPA has been referred to the House Committee on the Judiciary, where it will be discussed in upcoming hearings and (like the AMP Act of 2015) reviewed by the Subcommittee on Courts, Intellectual Property and the Internet.
Miriam DeChant is the director of legal services at the Arts & Business Council of Greater Philadelphia, where the Philadelphia Volunteer Lawyers for the Arts program provides pro bono legal assistance to the region’s creative industries. •