Big news about the Performance Rights Act and the future of sound recording copyrights in the U.S!
The United States Government Accountability Office (GAO) recently weighed in on the issue of the Performance Rights Act, which would make terrestrial radio stations subject to paying royalties to the sound recording copyright owners. For a discussion of the difference between a composition and sound recording, see http://crumpton-law.com/composition-vs-sound-recording-copyright.
Though broadcast stations already pay a royalty to songwriters, they do not pay a royalty to the performers, unlike their satellite, Internet and cable radio counterparts. Royalty amount would follow a tiered structure, based on a station’s revenue and its status as either a commercial or non-commercial station. The PRA also allows for an exemption for some uses of music, such as music in broadcasts of religious services and the incidental use of music by non-music stations.
Looking at the both ends of the tier system, commercial stations with revenue in excess of $1.25 million would have a royalty rate to be negotiated between broadcast radio stations and copyright holders, or determined by copyright royalty judges. Non-commercial stations with annual revenue above $100,000 have a proposed flat fee of $1,000 per year. In contrast, both commercial and non-commercial stations with revenue less than $100,000 would be looking at a proposed flat fee of $500 per year.
Revenue from the statutory royalty would be divided with 50 percent being paid to the copyright holder, 45 percent being paid to the featured performer or musician, 2.5 percent being paid to background musicians, and the remaining 2.5 percent going to background performers and vocalists.
Based on all of their review, the GAO found that:
• Both recording and broadcast radio industries are facing an economic challenge.
• Both industries benefit from their current relationship.
• Broadcast radio stations unable to adjust to the new additional costs, including both performance royalties and new administrative costs, might have to make a decision to “reduce staffing levels; change from music to nonmusic programming, such as news, talk, or sports; or discontinue operations”.
• Record companies, musicians and performers would benefit from additional revenue. Recording industry stakeholders claimed “record companies could use the additional revenue to invest more heavily in the creative process of music”.
The debate over a performance royalty for broadcast radio has been a long ongoing one, with heated arguments from both sides. Besides issues of potential revenue increases for the recording industry and additional costs for broadcast radio, an argument of “fairness” has been raised in regards to Internet and satellite stations that already pay for a performance right.
The Obama administration has pledged strong support for the current bill, citing broadcast radio’s exemption as “an historical anomaly that does not have a strong policy justification.”
A more detailed economic analysis from the GAO is forthcoming.
Crumpton Law LLC is a Columbus Small Business Law Firm, with attorney Matthew Crumpton serving as managing member and lead attorney.
Tags: copyright, Legal News, music law
