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American Music Fairness Act is Back in Congress

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APS Radio News — As during earlier times, Congress is considering changes in copyright law.

When the Digital Millennium Copyright Act was being debated and considered in Congress in the late 1990’s, the National Association of Broadcasters (NAB) had sufficient influence and clout to cause an exemption to be written into the law.

At the time, while digital broadcasting, for example, broadcasting over the media of satellite radio and the internet, would be subject to the obligation to pay royalties for the broadcasting of digital recordings, terrestrial or over-the-air radio would be exempt from being required to remit those royalties.

For years, terrestrial radio has been required to pay royalties for the broadcasting of lyrics.

Entities like ASCAP and BMI have collected royalties from over-the-air radio stations for their use of lyrics and compositions.

Since passage of the DMCA in 1998, the music industry and SouncExchange, which represents records labels and recording artists, have sought to remove or reduce the exemption that was created by way of the influence of the NAB.

As recently as 2021, a bill called the American Music Fairness Act was introduced in Congress.

That bill was intended to remove the exemption terrestrial radio stations have enjoyed since the DMCA’s passage.

As one would expect, one of the lobbying organizations has been SoundExchange, which collects and distributes royalties to recording artists and record lables like Warner Music.

About half of royalties SoundExchange collects go to record lable, and the other half goes to recording artists like Paul Simon.

SoundExcahnge called the exemption a “decades-long injustice”.

According to SoundExchange’s own website, in 2022, SX distributed over nine billion dollars in royalties.

During last year, with respect to the first quarter alone, SoundExchange distributed $235 million.

Pandora, Spotify and other entities that broadcast digital recordings over the air pay royalties to SoundExchange.

For example, in 2014, Pandora’s payments to SoundExchange represented over 50% of SoundExchange’s collections.

The year before, SoundExchange collected over $650 million from internet-related entities broadcasting digital recordings.

Thus, it payments to SoundEXchange were about $283 million.

As well, royalty payments are calculated differently, where satellite radio is concerned.

Whereas internet radio is required to pay royalties on the basis of fractions of a cent per performances–the number of listeners as a function of the number of times songs are played in a given period of time–satellite pays royalties on the basis of a percentage of revenue, for example, 6% of revenue.

But for years over-the-air radio stations have been exempt from paying royalties for the broadcasting of recordings, unless, of course, those entities simulcasted broadcasts over the internet.

During Congressional hearings, recently a representative from SoundExchange declared, “Music creators have been forced to give away their work for far too long,”

For their part, representatives of the National Association of Broadcasters maintain that removing the exemption contained in the DMCA would impose on terrestrial radio stations additional burdens.

Over the years, especially during times when large percentages of music sales were in the form of purchases of CD’s, broadcasters have posited the argument that the broadcasting of recordings helped to generate and stimulate record sales.

But as streaming music over the internet became ever more common, that argument has lost its persuasiveness.

Nowadays, many consumers of music access music through Youtube, Pandora and other online services.

Previous radio lobbying resulted in the creation of a nonbinding bill called the Local Radio Freedom Act, which has been endorsed by at least 250 members of the House and Senate.

Reportedly, that legislation was being justified as helping small radio stations.

The NAB argues that if the new legislation is enacted into law, it would hurt small radio stations, a number of which feature independent or Indie music:

Recently a representative of the NAB said, “The American Music Fairness Act would mandate a new performance tax on free, local radio stations that would jeopardize local jobs, prevent new artists from breaking into the recording business and harm the hundreds of millions of Americans who rely on local radio.”

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