Congressman Slams 'Free Ride' of Terrestrial Radio; Broadcasters Hit Back

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The National Mall in Washington, DC.

Rep. Jerry Nadler (D-NY) has penned a letter of support for the Fair Play Fair Pay Act, his legislative proposal that would establish a standard that currently doesn't exist: a performance rights for sound recordings on terrestrial radio. In a post on The Hill's blog for members of Congress, Nadler writes that over-the-air broadcasters get a "free ride" because of current copyright laws, and expressed confidence that an ongoing review of the Copyright Act of 1976 will bring parity.

"If Congress were to start with a blank sheet of paper, none of us would write the [Copyright Act] the way it stands today," he says in the post. "Thanks to special-interest exemptions, short-term reactions to changing technologies and congressional gridlock, the law that governs royalty payments is inconsistent and unfair, disadvantaging new technologies and massively shortchanging artists and musicians."

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He reminds readers that while webcasters like Pandora and iHeartRadio pay for their online streams (explained here), rights holders receive nothing when their music is played on AM/FM radio. "The bottom line is that terrestrial radio profits from the intellectual property of recording artists for free," he writes, adding that the U.S. is in bad company among nations that don't compensate artists for radio play. "The shortlist of countries that don't includes Iran, North Korea and the United States. It is a disgrace that needs to be remedied, and it is well past time that we align ourselves with the rest of the free world."

A staunchly liberal member of the House, Nadler co-sponsored the bill with one of its most conservative, Rep. Marsha Blackburn (R-Tenn.). Support has been building for the bipartisan bill (remember those?), and in May dozens of artists from Rosanne Cash to T Bone Burnett traveled to Capitol Hill to take part in Fair Play Fair Pay Day. Watch the event below:

The National Association of Broadcasters (NAB), the radio industry's leading trade group, vehemently opposes the bill, which would result in new fees for its members, warning in April that it would "kill jobs, hurt artist promotion and devastate local economies across America."

In a statement provided to Billboard, the NAB writes that it "is pleased a bipartisan group of 232 House members and 26 Senators oppose Rep. Nadler’s gift to offshore record labels at the expense of thousands of America’s hometown radio stations," referencing the Local Radio Freedom Act it is lobbying for. "Local radio airplay has launched and sustained the careers of countless artists, while scores of artists have sued record labels for non-payment of royalties. It’s disappointing that Rep. Nadler wants to punish the No. 1 promotional vehicle for the music industry -- free and local radio.”

However, Fair Play Fair Pay does have the support of some local broadcasting groups, like the National Federation of Community Broadcasters and the Alliance for Community Media.

One of Nadler's core arguments is that the Fair Play Fair Pay Act will help those local and public broadcasters by capping rates. He writes that stations with less than $1 million in revenue would pay $500 every year, while public/community radio stations would pay $100. Stations with religious and incidental uses of music would pay nothing. "That's less than the cost of a trip to Washington to lobby against artists," he says. "The Fair Play Fair Pay Act is the true local radio freedom act. No longer will smaller broadcasters be used as pawns in an immoral fight."

Nadler is a member of the House Judiciary Committee, which launched a review of the Copyright Act during the last Congress. Chairman Bob Goodlatte (R-Va.) recently signaled that the review will advance to the next stage.

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Intellectual property rights is the topic of the day for another member of that same committee, Rep. Jim Sensenbrenner (R-Wis.), though his focus in a Hill post was on the music licensing fees that some business like bars and restaurants pay to play music. Sensenbrenner argues that performing rights organizations (PROs) "operate in a convoluted fashion" when seeking payments from small business owners.

Sensenbrenner writes that the "vagueness" of narrow exemptions for licenses outlined in the Copyright Act of 1976 created the opportunity for a PRO (sometimes more than one) to "go after unsuspecting establishments, often anonymously." In the late ‘90s, the Wisconsin Republican introduced the Fairness in Music Licensing Act, which became law and has resulted in a large decrease in the number of establishments that need to pay for a public performance license to play music.

But, according to Sensenbrenner, problems still exist for some small businesses and he wants to fix what he views as an imbalance in the process.

"Establishment owners should not be forced to conduct business with every licensing society demanding a fee," he writes. "There needs to be transparency in how establishments are billed, and we need to ensure that when a business pays a music licensing fee, it knows what it is buying. There can be no fair long-term marketplace outcomes when the playing field is weighted in favor of performance rights groups."