Radio Industry Fighting Performance Royalty with Recording Industry

Implications: The recording industry is lobbying to create a performance royalty on the terrestrial radio industry to provide royalties to artists.  The radio industry is opposing any such action.

Analysis: The recording industry has been putting together a coalition for months to lobby Congress to create a performance royalty on AM & FM stations that would go directly to the artists.  The radio industry vehemently opposes such action.  A few facts:

There have been several attempts over the history of the radio and recording industry to establish a performance royalty.  Congress has denied such a decision, citing the interdepented relationship that exists between the two industries.  Radio industy plays music from the recordng industry which promotes artists and purchases by consumers.

Radio has for decades paid royalties to ASCAP, BMI and SESAC which are music licensing firms that collect fees and distribute them to authors (writers), composers, etc.  The artists receive a portion of these fees if the artist wrote the song.  Otherwise, the performers are paid based on their individual contract with the record label.

The recoridng industry has suffered declining revenues since Napster debuted back in the late 1990s.  Peer-to-peer file exchanges forever changed the way music is distributed and disrupted the business model.  One bright note is iTunes, which shows that a legitimate distribution system that is low cost and legal can be successful.  The recording industry would like a performance royalty to help buffer some of its lost revenues.

The radio industry has not had a good year since 2000.  Since then, radio listening and revenues have declined.  Adding a performance royalty would be a challenge for many radio stations.  Most radio groups are losing money.  Look at the stocks of the big radio players:  Cumulus, Citadel, Entravision, Saga, etc.  Most are in horrible shape due to loss of audience and advertisers.

Many other countries have a performance royalty for artists, but the US has never adopted one in the nearly 80+ years that radio has existed.

XM and Sirius do pay a artist performance royalty, but this was based on the Digital Millenium Copyright Act, and the fact that both are subscription services.

It's a complicated mess.

The issue may be moot as the lobbying efforts of the broadcasters through the NAB are close to having enough votes in the House to block a measure.  The Senate effort is just underway.  But this situation underscores the need for the two industries to try to figure out how to work together to benefit each other, rather than trying to devastate one another.