Update: Billboard is told the Warner-Clear Channel deal will pay artists' share of royalties to SoundExchange. This process means artists' royalties for broadcast radio follow the same route as digital performance royalties and will not be treated like royalties for purchases.
The groundbreaking partnership between Clear Channel and Warner Music Group isn't the end of the performance right debate. In fact, the deal, which gives Warner a share of broadcast and digital revenue as well as promotional considerations, has sparked a renewed outcry for a broadcast radio performance right for record labels and artists.
Thursday's announcement does not mean Congress won't eventually get involved. Record companies and artists still want a performance right codified into law. Rep. Mel Watt still plans to introduce legislation that would establish that performance right.
In an email to the Warner staff obtained by Billboard, CEO Stephen Cooper said the company "will continue to lobby passionately for a performance right for sound recordings in the U.S. Our deal with Clear Channel is not a substitute for legislation."
I've received similar statements or sentiment from musicFIRST, the RIAA, A2IM and the Recording Academy. All applaud negotiations that result in payment to labels and artists for use of their music on broadcast radio. In their eyes, Clear Channel's deal with Warner and other one-off deals between broadcasters and record labels are effectively an acknowledgement of the need for a performance right.
Calls for a performance right didn't stop with music companies. On Thursday, a group of seven organizations, ranging from Americans for Tax Reform to Citizens Against Government Waste, urged the House of Representatives not to support the Local Radio Freedom Act, the radio industry's effort against a performance right for broadcast radio. "Because this resolution endorses the status quo, it has a chilling effect on the development of a forward-thinking policy that respects the rights of all music producers in all media," their letter states.
Why is a performance right still desired if private deals are being consummated? One reason is coverage. Deals between select broadcasters and record labels don't cover the vast majority of record labels and artists. musicFIRST Executive Director Ted Kalo believes "if creators had such a right, all creators (not just those on labels that negotiated a deal) would be more justly compensated." A right isn't a right if not enjoyed by all.
Another benefit to codification is reciprocity with foreign collecting societies. Because no law exists for foreign artists to be paid for their plays in the United States, American labels and artists do not receive performance royalties paid from broadcast radio plays in other countries. The Recording Academy's Daryl Friedman puts the value of lost oversees reciprocal royalties at "tens of millions of dollars a year."
The establishment of a performance right would mean more money in artists' pockets. As Friedman points out to me, "only legislation will ensure songwriter royalties are protected and artists are paid 50% of the royalties directly.” Because deals with broadcasters route money through record labels' royalties systems, artists would receive royalties if they had recouped expenses. In contrast, the performance right granted for digital performances means artists' 50% share of royalties from services like Pandora is paid directly via collecting society SoundExchange.
A U.S. performance right would narrowly focus on broadcast radio and wouldn't cover public venues and special products such as ringtones. As a result, according to a 2011 academic paper, the performance right will fail to trigger full reciprocity from many countries. But like the Clear Channel-Warner deal, a legislatively established performance right would be a major event for the record business.