Music industry representatives contacted by Creative Industries News have challenged the description made by National Association of Broadcasters CEO Curtis LeGeyt of the reasons why the two parties failed to reach an agreement on the issue of performance rights for sound recordings during the House Judiciary Committee hearing on the American Music Fairness Act.

Speaking during the virtual hearing, LeGeyt — who ascended to his current role in 2020, but was previously NAB’s Executive Vice President, in charge of Government Relations — recalled how, four years ago, Jerry Nadler, the current Chair of the Judiciary Committee, invited all parties to find a fix once for all the issue of royalties on sound recordings.

While 1998’s DMCA introduced performance rights on sound recordings for non-interactive online and satellite services, the issue had been absent from the Music Modernisation Act the was passed by Congress in 2018. To this date, neither performers, nor record labels receive compensation when their recordings are played on US radio.

A new burdensome royalty

“Mr. Chairman, four years ago I sat with you and several of your Judiciary colleagues — Democrat and Republican — in this Committee’s library,” said LeGeyt. “At that time, in the aftermath of our work together in support of the Music Modernisation Act, you made a straightforward request of the broadcast and music industries, all of whom were represented in that room. You asked us to work together to develop a proposal on this terrestrial performance royalty issue that could represent a win-win for music creators and local broadcast listeners.”

Continued LeGeyt: “In response, NAB worked for more than 18 months and offered numerous proposals to our industry partners behind closed doors that aimed to achieve that goal. Our approach was tethered in the belief that both artists and listeners could benefit from a change in law that didn’t simply create a new burdensome royalty for broadcast stations, but instead enabled broadcasters to innovate, incentivised them to play more music, and benefited artists by compensating them for that increased airplay whether it took place over-the-air or through a stream.”

LeGeit went on to say that even when NAB’s “concepts were rebuffed,” the organisation would “come back to the table with new ideas time and time again.”

No formal counteroffer

“Unfortunately, the music industry was unwilling to do its part in these negotiations,” claimed LeGeyt. “Our proposals were legitimate, made in good faith, and NAB was committed to seeing whether common ground might be possible. But beyond lip service, at no point were we even met with a formal counteroffer from the music industry.”

LeGeyt added that such outcome was “disappointing to me and the broadcast industry at the time, and as a result, we find ourselves in this hearing room today debating a performance fee proposal that is strikingly similar to its predecessors. One whose introduction the music industry advocated in spite of knowing that it does not strike the balance that you and your colleagues requested of us during that meeting four years ago.”

For the executives contacted by Creative Industries News, LeGeyt’s description of the discussions does not match their own recollection of the situation.

Need for serious and reasonable negotiations

“It is completely untrue that the coalition was ‘unwilling to negotiate’,” said Dr. Richard James Burgess, President and CEO of independent labels’ organisation A2IM. “Our side has always been willing to negotiate,” explained Michael Huppe, CEO of Washington, DC-based rights society SoundExchange, “but the negotiations need to be serious and reasonable. The NAB generally insists that we mortgage our digital future in exchange for a small piece of the declining analogue present. Offering a scenario that leaves creators worse off is hardly a serious negotiation.”

Huppe declined to go into the details of the negotiations, but several sources indicated that NAB’s proposals were not made “in good faith.” For A2IM’s Burgess, the music sector “negotiated for many months” with the NAB and the broadcasters (according to sources, the discussions took place between January and October 2018).

“Our side laid out complex potential methodologies,” Burgess told Creative Industries News. “In the end the offer they made was so low — far below the offer from the previous set of negotiations and with unacceptable other conditions — that it was clear they were not seriously trying to come to a resolution and that there was no practical way forward.”

Extraneous demands

“NAB has been unwilling to negotiate about a terrestrial right without insisting on extraneous demands that would further harm artists and rights holders, such as paying for terrestrial radio through a discount on digital,” said a Washington, DC-based source who was privy to the negotiating process with the NAB. “The point is to pay for all uses, not to pay for one use by not paying for another.”

Several sources pointed out that NAB’s proposals always seemed about getting discounts in the digital royalties side of the pie and ensuring that performance rights on sound recordings would come out of the pot they were already using to pay songwriters and publishers via societies such as ASCAP, BMI and SESAC, but not expanding the pie.

That point was made apparent during the hearing. LeGeyt explained: “There is a pot of money for local broadcasters to pay in royalties to rights holders. We are not hellbent on preventing performers from having a larger slice of that pie. We are all for a holistic conversation. And if that money needs to be divvied up differently, let’s have that conversation.”

Getting a fair outcome

For the music side, the time for negotiations is now over, and the music industry is putting its energy behind the legislative process and the passing of the AMFA. Joe Crowley, a former Congressman, who is Chairman of the musicFIRST coalition, said the way forward is to pass the AMFA, which he believes could be done before the end of the year.

“While I’m sure Mr. LeGeyt and the NAB would love to live in the past and do anything they can to distract people’s attention the momentum of the American Music Fairness Act, we’re keeping our focus on the present and the future,” said Crowley.

“The discussions of several years ago didn’t yield a fruitful compromise because the broadcasters weren’t willing to offer artists a fair deal — and we’re hopeful that, with the help of our leaders in Congress, we can get to a fair outcome moving forward.”

A starting point for discussions

Crowley added, “We, as well as a bipartisan group of lawmakers, believe the American Music Fairness Act is just that kind of fair deal. Our door is always open to the broadcasters if they want to come to the table and play ball for real — but make no mistake, the AMFA is the starting point for any such discussion.”

Crowley also noted that any privately negotiated settlement between the music industry and broadcasters “would need to ultimately be legislated into law in order to be effective. This is a problem of outdated laws — and outdated laws can only truly be fixed by passing new, better laws.”

SoundExchange’s Huppe believes that the House Judiciary Committe’s hearing “demonstrated the momentum that this issue is gaining. Almost all the Members commented on the rank unfairness of the $10 billion radio industry paying nothing for the recordings that drive their business. The old excuse that ‘it’s always been this way’ just doesn’t cut it anymore.”