The House Judiciary Committee‘s virtual hearing on February 2 on the American Music Fairness Act, which was designed to evaluate the impact of introducing a performance right on sound recordings when played on terrestrial radio, provided a platform for the creative sector to ask Congress to “close a loophole,” in the words of Gloria Estefan (pictured, above), and for broadcasters — via the National Association of Broadcasters — to challenge the notion of a royalty on sound recordings.

The American Music Fairness Act (AMFA) was introduced in the House by Reps. Darrell Issa (R-Calif.) and Ted Deutch (D-Fla.). Witnesses called to testify on the Hill included: songwriter and recording artist Gloria Estefan; economist Barry Massarsky, Partner and Co-Leader of the Music Economics and Valuation Services Practice at Citrin Cooperman Advisors LLC; engineer, producer and musician Lawrence “Boo” Mitchell, owner of Royal Studios; Curtis LeGeyt, President and CEO of the National Association of Broadcasters (NAB); and bass player, writer, and producer Dave Pomeroy, President of the Nashville Musicians Association and International Executive Officer at the American Federation of Musicians.

Committee Chair Jerry Nadler said in his introduction that the AMFA would fix “a long standing injustice” that “unfortunately has been a fixture” in the American music system. Nadler also pointed out that “unlike all other music platforms, terrestrial radio can use and profit from the IP of artists for free,” adding that he did not know of any other industry that could operate in the same way.

A competitive disadvantage

The solution for Nadler is for Congress to pass the bipartisan legislation, which will require radio stations to pay royalties for the music they broadcast. Nadler added that he always found that the argument presented “for years” by broadcasters that they should not pay because airplay was promoting music was “dubious.” For Nadler, streaming platforms “have made this argument less relevant” and music discovery takes place on the new platforms.

The fact that satellite and digital radio, which offer “the same music” as terrestrial broadcasters, pay royalties on sound recordings and not terrestrial radio puts “internet and satellite radio at a competitive disadvantage,” claimed Nadler.

He also noted that American artists “miss out on royalties” when their music is played overseas, but since there was not a similar performance right in the USA, American artists are deprived of some $200 million annually. “This is an issue about fairness for artists,” concluded Nadler, who called for a the creation “once for all of a system that is platform neutral and respects artists.”

Artists are left out

Rep. Issa focused his opening statement on the provisions in the law that introduce exemptions for “small” broadcasters. Stations with revenues under $1.5 million a year would pay $500 a year for the use of recordings, college radio stations $100 and small community-based stations only $10. “This a bill to say all we are asking for is a penny,” said Issa, who noted that for many of these stations, $500 is “a fraction to what they pay in NAB membership fee.”

Latin music artist Gloria Estefan was the first witness to testify. “For so many American music creators, life has become dire since the start of the pandemic,” said Estefan in her opening remarks. “As a result of Covid, they had to drastically cut back on live performances, or cut them out altogether, eliminating an important and often sole source of revenue.”

For Estefan, a performance right for performers, musicians and producers would have benefits for everyone, in particular for the generation of older artists whose songs are still radio favourites, but who cannot necessarily go out on the road any more. She said that while radio stations can “benefit from advertising dollars,” the “featured artists, the singers, producers and studio musicians are left out, especially the music legends that cannot pay rent with the exposure offered by broadcasters.”

Rectify an inequity

Estefan said the AMFA would rectify an “inequity.” “When their music is played on the radio, artists don’t get paid, only the songwriters,” said Estefan.

Barry Massarsky from Citrin Cooperman Advisors, said that 67% of radio’s output was filled with music. He added that the absence of performance right on sound recordings was “no longer rational in economic terms.” To the question “can radio stations pay” these rights, his answer was a quick “Absolulty yes!”

Music producer Lawrence “Boo” Mitchell, who worked on Bruno Mars‘ hit single “Uptown Funk’, stated that “no one in the recording has ever been paid by broadcasters. They can play a record without asking permission and use our music to sell billions of dollars in advertising.” As for exposure, he asked: “When they play ‘Uptown Funk’, they don’t say Boo Mitchell, so why is that exposure?”

A dire effect on local radio

He also reminded the audience that it was the 50th anniversary of the recording of Al Green‘s ‘Let’s Stay Together’, which was recorded by his father, who “never received a penny from radio for his work.” He called it “a gross injustice and a stain on our democracy.” He added: “Time is running out to fix this injustice. These artists are not looking for free promotion on radio.”

NAB President and CEO Curtis LeGeyt said that for 100 years, broadcasters have been providing free access to listeners and have been building connections with local communities. The AMFA could seriously impact the ability for radio stations to continue to serve their communities.

“This legislation will have a direct effect on the investment in local communities,” said LeGeyt. “There will be less boots on the ground, less investment in infrastructure. It will have a real bottom line impact on communities that it serves.”

A significant fee

For LeGeyt, there is a focus on large radio groups but NAB also represents close to 200 radio groups that would fall outside of the exemptions. “$500 is a significant fee for these businesses,” said LeGeyt. “This is real money that they are already paying when simulcasting. Small stations have come out and raised concern.”

LeGeyt added that record labels and artists “recognise the value” brought by radio stations. “We are proud of that partnership,” he said. He also explained that radio stations are already paying “hundreds of millions of dollars in fees” to rights societies ASCAP, BMI, and SESAC, which in turn pay songwriters and music publishers. “This is a business relationship that has allowed decades of growth in the broadcast and music industries,” said LeGeyt.

Dave Pomeroy focused most of his remarks on the international aspect of performance rights, pointing out that the USA were an oddity for not having such a right in place.. “The only other countries on the planet that do not pay artists, singers and musicians for the use of their work on terrestrial radio are Iran and North Korea. Do we really want to be on that list?” he asked. The lack of performance right in the US creates “a trade issue” and an “imbalance.”

Not a money grab

“We create most of the music in the world, but we cannot get paid from overseas,” he said. “It would make a huge difference.” He said the issue was not about “superstars making a money grab” but a change in the law could bring benefits throughout the value chain, since it would generate “a floodgate of new taxable income” into the US.

Commenting on the hearing, former Congressman Joe Crowley, currently Chairman of the musicFIRST Coalition, said: “Today’s hearing on the American Music Fairness Act is a massive step toward true music fairness and securing fair pay for the working musicians across the country who help make the soundtracks to our lives. On behalf of the musicFIRST coalition, I’d like to offer my sincere thanks to Chairman Nadler for taking up this issue; to Reps. Issa and Deutch for continuously championing the rights of American music creators; and to all of the music creators who testified today for bravely sharing their experiences and putting a human face on this pressing problem.

He added: “We were disappointed that not a single broadcasting company chose to appear for today’s critical conversation before Congress. But they will eventually have to realize that it is time for billion-dollar corporate broadcasters to finally pay musicians for their hard work and stop exploiting their music for profit. We’re grateful to the Members of Congress who are already standing up for working class musicians, and we look forward to welcoming more lawmakers to our cause — including our friends in the Senate — in the weeks ahead.”