By Mahira Khan
After over two years without a congressional hearing, a subcommittee in the
House Energy and Commerce Committee heard testimony on the “Future of Audio”
June 6, awakening the dormant copyright performance royalties issue.
As witnesses expressed the need to support innovation and a legal system that
adapts to rapidly changing technology, it soon became clear that the
long-standing debate on performance rights legislation as applied to
broadcasting companies needed to be resolved first.
The House and Senate Judiciary Committees, which have jurisdiction over the
issue, last acted on the matter in the form of two 2009 bills, H.R. 848 and S.
379, which sought to create a statutory public performance right for recording
artists whose recordings are transmitted by broadcast stations (23 PTD, 2/6/09).
Such a performance right would allow copyright owners to obtain royalties
currently denied to them.
The twin bills were the subject of both House and Senate Judiciary Committee
hearings(23 PTD, 2/6/09; 149 PTD, 8/6/09; and 62 PTD, 4/3/09). The House
Judiciary Committee approved H.R. 848 in May 2009, and in October, the Senate
Judiciary Committee approved an amended version of S. 379 (91 PTD, 5/14/09; 198
However, there were no further developments until August 2010, when the
interested parties circulated a proposed compromise that included a mandate for
wireless carriers to equip mobile phones to received and play FM radio signals
(163 PTD, 8/25/10). Broadcasters later voiced support for “limited” performance
rights, conditioned in part on the FM chip mandate (206 PTD, 10/27/10).
In March 2011, the Office of the Intellectual Property Enforcement
Coordinator released a white paper asking Congress to enact public performance
legislation (52 PTD, 3/17/11). The white paper expressed the Obama
administration's view that providing public performance rights would improve
international intellectual property enforcement efforts.
It was expected that the IPEC's white paper might prompt reintroduction of
the performance rights legislation, but the lawmakers did not take up the issue
again until the June 6 hearing. And rather than the Judiciary Committees, it was
the House Communications and Technology Subcommittee that heard testimony from
technology, recording, and broadcasting companies.
The subcommittee chairman, Rep. Greg Walden (R-Ore.), a former radio owner
and producer, opened the hearing by giving his former employer's “station
identification,” then remarking that the performance royalties issues have
“vexed [the] industries for years.”
Tim Westergreen, founder of Pandora, noted the current disparity between
over-the-air terrestrial radio broadcasters--which are not yet required to pay
royalties to performers and record companies whose music they play on the
radio--and online broadcasters like Pandora, which do have such an
“The inequity arises from the fact that Congress has made decisions about
radio and copyright law in a piecemeal and isolated manner,” Westergreen told
the subcommittee. “As each new form of radio transmission was invented, new
legislation was passed but only to address the new form. The effect has been to
penalize new media and advantage old media when setting the rules for music
According to Westergreen, the performance fees that Pandora paid to
performance artists last year amounted to 50 percent of the company's
Artists and musicians have been fighting for their right to performance
royalties from broadcasters for years in this country. Ben Allison, a bassist
and composer as well as governor of the New York chapter of the National Academy
of Recording Arts and Sciences, argued that every developed country in the world
except for the United States secures its artists the right to royalties from
“To add insult to injury, terrestrial broadcasters are now asking for another
legislative perk--a mandate to include FM receivers in smart phones,” Allison
said. “They already exploit one anomaly in the law--they do not pay performers
while new audio technologies do. Now they want a second legislative anomaly--to
have a free ride--quite literally--on the backs of new devices,” he
Jeff Smulyan, CEO of Emmis Communications, advocated for free access to radio
on mobile phones, despite his clear rejection of congressional mandate of FM
Smulyan pointed out that although 59 out of the hundreds of mobile phones
currently on the market have FM chips, most of them are not activated, and “the
market has been closed in this country.” Radio chips would provide life-saving
information during times of emergency, at no cost, he said.
According to a recent Harris Poll, Smulyan claimed, “81 percent of those
polled who own a mobile phone would consider paying a small, one-time fee to
access their local radio stations.”
Yet, Rep. Anna G. Eshoo (D-Calif.) introduced a consumer survey in which
virtually none of the consumers across the board, ages 18 to over 65, selected
the FM chip as a cellular phone feature that is most important to them.
Gary Shapiro, president and CEO of the Consumer Electronics Association
stated, “Why not mandate them in cars, in lights, in pillows? Why all of a
sudden smart phones?”
The day before the hearing, the nation's largest owner of radio stations,
Clear Channel, made public its agreement with Big Machine, a Nashville record
label. Many see this new royalties deal as a breakthrough.
The agreement would allow for Big Machine and its artists, including Taylor
Swift and Tim McGraw, to share in Clear Channel's terrestrial broadcast as well
as digital radio revenue.
Cary Sherman, head of the Recording Industry Association of America, largely
supported the new deal. “It's a breakthrough. We've been advocating for this for
about 80 years so obviously it's very important, but we need an industry-wide
solution, not a label-by-label, piecemeal solution.”
Congress may have to decide whether to require performance royalties from
broadcasters before it takes up the issue of mandating FM chips in mobile
As Allison said, “Artists believe Congress should address the first anomaly
[performance royalties] before there can be any discussion about the second [FM
chips]. With the largest radio broadcaster agreeing that a terrestrial
performance right should exist, there is no longer any legitimate argument for
the NAB to oppose the right.”
Although the Energy and Commerce Committee does not have jurisdiction over
copyrights, this oversight hearing may revive the discussion on change to the
copyright broadcast loophole.
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