Artists and record labels who have been agitating for parity with songwriters took a major step forward this past Wednesday when House Judiciary Committee Chairman John Conyers introduced H.R. 848 the “Performance Rights Act”. The bill would require terrestrial broadcasters to obtain a license from holders of copyright in sound recordings whenever they transmit music. The bill would also require 50% of these licensing fees to be paid directly to recording artists, regardless of the terms of their contract with record labels.
While this is a good first step, the bill leaves a lot to be desired by way of achieving parity between the treatment of terrestrial broadcasters, satellite broadcasters, and webcasters.
By way of background, until 1995 copyright law did not provide a general public performance right to owners of copyright in sound recordings i.e record labels and artists. This meant that a radio station transmitting music had to acquire a license from the owner of copyright in the underlying music, but not the record label or artist. That changed, albeit in a limited sense, when Congress passed the Digital Performance Right in Sound Recordings Act of 1995, requiring all digital broadcasters except terrestrial broadcasters to seek a license from both the songwriters and record labels when transmitting music. H.R. 848 extends this obligation to terrestrial broadcaster as well.
However, that is not the end of the story. Although the bill would require all broadcasters to acquire a license, it does not treat all broadcasters equally. If transmission services and record labels fail to agree upon the terms of their licenses, then rates are set by the Copyright Royalty Board(CRB). In setting these rates, the CRB applies different standards to satellite broadcasters and webcasters: standards applied to webcasters are skewed more in favor of the labels and artists than standards applied to satellite broadcasters. Many webcasters claim that rates established using these standards have been so high that many of them have been driven out of business.
H.R. 848 lumps the terrestrial broadcasters with the webcasters but contains certain carve-outs for small radio stations, public broadcasting entities, and religious broadcasters. Thus, stations with gross revenues of less than $1.25 million may elect to pay a royalty fee of $5,000 per year, public broadcasting entities may elect to pay $1000 per year, and no fee appears to be due for transmission of music that was part of a religious service.
If exemptions for small and public broadcasting stations are good policy, the same policy should also apply to noncommercial and small webcasters. Yet this bill contains no analogous provisions for small webcasters.
Section 4 of the bill contains a further benefit for broadcasters. One provision would require the Copyright Royalty Judges to create a per-program licensing option for terrestrial broadcasters that “make limited feature uses of sound recordings.” So, if a terrestrial radio station is mostly talk, but occasionally uses recorded music in one of its shows, they may be granted a per-program licensing fee. While this provision, probably borrowed from the licensing structure used by ASCAP and BMI, is fair to any broadcaster, limiting its availability to only terrestrial broadcasters is not.
Section 5 amends the current law provision that prohibits sound recording performance royalties from being “taken into account” in administrative, judicial, or other governmental proceedings. Under the bill such royalties could not even be “cited” in any “governmental forum or proceeding” that set or adjust license fees for songwriters.
Discussion of the Performance Rights Act is likely to come up in Gigi's panel on “Copyright and Innovation in the Digital Age” at the Future of Music Coalition's Policy Day this Wednesday. Hear what the experts might have to say about the bill.