By Scott M. Fulton, III, Betanews
If Congress were to pull the trigger, eliminating language from US Code dating back to the 1920s stating that terrestrial radio stations don't have to pay royalties to play music whose performers they promote, the resulting shock wave could impact the Internet music industry, and digital music publishers in general. With some radio broadcasters reducing or even eliminating their air time -- one such threatened repercussion -- Internet radio alternatives like Last.fm and Pandora could pick up more listeners. But with possible new performers' royalty rates that could result, with terrestrial radio serving as a gauge for what all broadcasters should pay, those Internet stations could end up paying more for absorbing those new listeners.
That outcome is by no means certain, but one of the few likelihoods in the whole radio royalties debate came to fruition today, as the latest version of the Performance Rights Act passed the House Judiciary Committee by a vote of 21 - 9. That committee is chaired by John Conyers, Jr. (D - Mich.), who is the bill's principal sponsor, and whose realignment of judiciary subcommittees following last November's elections certified that his committee would be the one marking up the bill, and not a subcommittee chaired by Rep. Rick Boucher (D - Va.).
The original language of the bill mainly consisted of striking the exemption language in Title 17 of the US Code. But in the bill's evolution, it's gained some interesting amendments including one that mandates that copyright holders -- the ones receiving royalties from radio already -- pay 1% of their receipts as royalties to a performers' rights fund managed by the American Federation of Musicians.
So it's no surprise that the AFM came out in support of today's vote, with its president, Thomas F. Lee, stating today, "This legislation will close the loophole in the copyright law and end the free pass that terrestrial radio has enjoyed to play music without paying the royalties that all other music platforms -- including satellite, cable and Internet radio stations -- pay artists, musicians and rights holders for the use of their recordings."
But there may be a silver cloud lurking behind that dark lining: As the National Association of Broadcasters reminded the press this afternoon, a resolution opposing any such striking of the exemption language has gained the signed support of 44% of the House. That doesn't spell smooth sailing ahead for the Conyers bill. Recently, observers of Congress noted that Conyers' language might stand a chance of passing if it were attached to some other legislation, as what's typically called a rider. That's the way, in 2006, Sen. Majority Leader Bill Frist (R - Tenn.) famously got his language banning monetary transactions related to online gambling signed into law by the President -- by tying it to a shipping ports anti-terrorism protection bill that Mr. Bush couldn't help but sign.
With the AFM fund creation language hanging on Conyers' bill now, however, transferring it to a rider on some other pressing legislation becomes harder. As the bill later comes up on the House floor, where a terrific debate is now certain, it has to pass or fail on its own merits. If it passes, radio stations could find themselves owing a percentage of their revenue to performers' rights organizations for the first time, perhaps borrowing a formula newly applied to Internet radio stations. If the bill fails, then it's more likely that a decision reached last January by the Copyright Royalties Board to base Internet radio broadcasters' royalties on revenue and not numbers of performances, would continue to be recognized by Congress.
Copyright Betanews, Inc. 2009