Debate Begins Over New Radio Royalty Bill Introduced in Congress

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The emails are flying fast today following the Congressional introduction of the Local Radio Freedom Act (LRFA) on Tuesday (Feb. 24).

On one side, the National Association of Broadcasters, which vehemently (and unsurprisingly) opposes making terrestrial radio broadcasts responsible for paying for the public performance rights of sound recordings. LRFA -- introduced by Texas Congressmembers Michael Conaway and Gene Green -- would prevent this. On the other side, the musicFIRST Coalition, an artist-centric organization which opposes LRFA on the basis not only of artist remuneration but also the effect the bill could have on debate around the Judiciary Committee's current review of copyright law.

Similar bills have been attempted at least twice before. Once in 2009, called the Performance Rights Act, and once in 2013, called the Free Market Royalty Act.

"For decades, local radio airplay has jumpstarted and sustained the careers of countless musicians and record label moguls," said NAB president and CEO Gordon Smith, in a statement. "Local radio's unparalleled promotional value drives increased record and merchandise sales and sells out concert venues. NAB applauds lawmakers for standing with hometown broadcasters in opposing a job-killing performance royalty that would damage the No. 1 platform for exposing new music."

While Smith touts the value of local radio and promotion, the assertion is a little disingenuous when looking at the ownership of U.S.-based terrestrial stations. Out of 11,357 AM and commercial FM stations in the country, over 850 belong to iHeartMedia, based in Texas (where the LRFA's authors are based), alone. Over 450 belong to Cumulus Media, based in Georgia. Over 300 belong to Townsquare Media, based in Connecticut. Over 130 belong to CBS Media, based in New York, and over 130 belong to Entercom, based in Pennsylvania, as well. The takeaway here: a not-insignificant portion of "local" U.S. stations are owned by five companies. This consolidation allows companies to promote similar playlists and artists across the format-aligned stations in their networks.

The NAB also did not address the disparity between the royalties terrestrial radio pays and the royalties that digital broadcasters such as Pandora (which is continuously attacked for it's alleged low payout structure, based on statutory licensing) pay.

"We believe Congress should have a robust discussion about the mechanisms by which people who make music are compensated for their creative property," reads a letter from Congressmembers to their colleagues. "Unfortunately, the Local Radio Freedom Act is a misleading resolution aimed at preemptively shutting down this important debate so terrestrial broadcasters can continue to profit from the work of musicians without any compensation."