Congress begins new push for radio royalty.

Story by Inside Radio

Congress has remained on the sidelines for the past two years as the music industry has continued to press for a performance royalty on broadcast radio. But that will change in the coming days as Rep. Mel Watt (D-NC) plans to introduce a royalty proposal before Congress takes its traditional August break.

The last time a royalty bill was filed was in 2009, eventually leading to negotiations and an offer that the record labels ultimately rejected. In the years since, several private deals have been reached between radio groups and indie labels. But the major record companies have so far resisted, and their supporters are once again taking the legislative route. “We have been talking about this for a while, and I believe it’s time to act on it,” Watt told his colleagues yesterday during a House Judiciary Committee hearing. He’s hoping to bring some co-sponsors onboard by positioning his bill as correcting something “extreme” and “unfair” to American artists, who aren’t able to collect international royalties since the U.S. doesn’t do the same for foreign musicians.

The National Association of Broadcasters “strongly opposes” the bill, saying it would “kill jobs” if stations were forced to pay a royalty. But the music-industry backed Music First Coalition applauded Watt’s planned bill, calling the lack of a radio royalty an “injustice that denies performers’ compensation when their work is played on AM/FM radio.”

The music industry has an uphill battle, having come up short on numerous occasions for decades. Since the start of the year NAB has already marshaled opposition to the idea from 154 members of Congress, who’ve all taken a public stand against the idea. When the radio royalty bill was debated in Congress in 2010 it never came to a full vote in Congress. Then-House Speaker Nancy Pelosi (D-CA) complained it was blocked by an “army of advocates” from both parties supporting broadcasters.

As Congress considers whether to insert itself more forcefully into the debate over performance royalties, deals continue to be reached between radio groups and record labels. Clear Channel has signed its 12th revenue-sharing arrangement, announcing the indie label Innovative Leisure will receive a share of revenue for on-air spins as well as on the iHeartRadio digital platform. It’s an arrangement similar to ones that Clear Channel, Entercom and Beasley Broadcast Group have struck with other record labels. It’s also an approach that the National Association of Broadcasters is pushing Congress to defer to. “We continue to support private, company-by-company negotiations that are driven by the free market,” spokesman Dennis Wharton says.

Not every label thinks Congress should remain hands-off. YepRoc Records co-founder Tor Hansen told the House Judiciary Committee yesterday that the “missing element” in figuring out what to do with internet radio royalties is a similar fee on over-the-air radio. “Independents have made inroads in airplay, and we thank terrestrial radio for the increased access,” he said. “But we still don’t have a performance right that would ensure music creators get paid when their sound recordings are broadcast on over-the-air radio, the only major country in the world without this right.” Without a change in the law, Hansen said musicians are missing out on royalties from foreign countries.

But Rep. Jason Chaffetz (R-UT), who has been leading the effort to come up with a legislative compromise on streaming royalties, pushed back on the idea radio can be replaced by Facebook or YouTube. He pressed Hansen on where his label goes to promote its acts. “It’s online, it’s on the radio, it’s in the clubs — it’s all over the place,” the label executive responded.

To that, Chaffetz said there’s “great value” in driving people to the clubs and creating awareness of acts. “We want artists to be fairly compensated,” Chaffetz fired back, “but there’s value to being on the radio — you’re not going to the yellow pages.”