Radio

Don't Expect Radio to Start Paying Artists Anytime Soon

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A battle is ramping up again this summer between Big Radio and Big Music over -- you guessed it -- performance royalties. Here's why it probably won't go anywhere.

For roughly the last 10 years, every artist who has ever won a Grammy Award has thanked spouses, publicists, record labels, fans, agents and God -- but never radio stations. Why? Artists are furious that broadcasters haven't paid them for their work in 110 years.

Over this time, artists and their representatives have filed lawsuits, convinced Congress to introduce legislation and lobbied state and local officials. They always have star power on their side, trotting out singers from Frank Sinatra to Dionne Warwick to make their case. But the broadcasters, from corporate giant iHeartMedia to tiny chain Bryan Broadcasting of College Station, Texas, keep winning. They simply have more political power.

That's because while the music business is concentrated in Los Angeles, New York and Nashville, radio stations are everywhere, building relationships with local politicians in person. "Broadcasters are in every district and their relationship with members of Congress is strong," says Jonathan Lamy, a communications consultant who represented the Recording Industry Association of America for years.

The battle is ramping up again this summer, and the latest skirmish between Big Music and Big Radio is in what Lamy calls the "pre-scrimmage-flexing" phase.

In May, the National Association of Broadcasters declared 124 representatives and 15 senators supported its Local Radio Freedom Act, opposing "any new performance fee, tax, royalty or other charge." Supporters include Sen. Lisa Murkowski (R-Ark.) and Rep. Sharice Davids (D-Kansas).

(Radio stations have paid mechanical rates to songwriters and publishers for years.) 

A month later, the record industry announced a competing bill, the American Music Fairness Act, sponsored by U.S. representatives Ted Deutch (D-Fla.) and Darrell Issa (R-Calif.), requiring stations to "compensate all artists for their property." As Warwick said at the time: "It’s time to pass legislation that finally levels the playing field and ensures fairness for working musicians.”

The broadcasters’ counter argument – as it has been for years – is that performance royalties would cripple their business. Ben Downs, general manager of Bryan Broadcasting, told Billboard recently that such fees would cost KNDE Candy 95.1 in College Station one of the chain's 11 stations, an additional $120,000 per year. The new record-industry bill tries to account for this, creating a tiered system in which stations that earn less than $1.5 million annually would pay just $2 per day for unlimited music.

But it doesn't matter. Neither bill is likely to pass.

Since the Copyright Act of 1909, broadcasters have consistently won this argument -- in the '30s, when top bandleaders Fred Waring and Paul Whiteman formed an advocacy group called the National Association of Performing Arts; in the late '80s, when Frank Sinatra wrote letters to fellow pop stars to build a unified artists' coalition; and in the '90s, when Congress passed laws forcing digital services to pay royalties and exempted over-the-air broadcasters from doing the same. ("I personally was brought into this some 28 years ago by Frank Sinatra," Warwick said in her speech supporting the record-industry bill. "That's how long I have been actively involved.")

There are, however, signs the broadcasters may not hold out forever. Radio ad revenues have been flat for years, so stations don't have as much financial clout as they used to, while record labels are booming due to streaming. And while big broadcasters iHeartMedia and the other big companies are taking advantage of streaming apps and podcasts, smaller groups lack the means to do so, and are at risk of losing business. These groups might be more willing to make a deal.

Gordon Smith, the NAB's president and CEO, used to call the royalty a "Damocles sword hanging over the radio industry," but has more recently hinted he might support a deal involving lower digital rates in exchange for the performance royalty. That sort of trade might benefit radio as it, like labels have, transitions to a digital environment.

Such cooperation is unlikely just yet, though. This year, the NAB has been drawing more and more congresspeople to its side, recently announcing support from 177 representatives and 22 senators. (This is slightly lower than previous years, like the 2019-20 legislative session, when 228 congresspeople announced support for a pro-radio bill, but it’s still early.) And Congress, while perhaps not as partisan as it was during the Trump era, remains divided on most issues.

"The political calculus," Lamy says, "is probably as daunting as ever."