RIAA Explains To U.S. Copyright Office Why Radio Should Pay More In Royalty Fees

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The RIAA has responded to the U.S. COPYRIGHT OFFICE's request for comments in a "Music Licensing Study: Notice and Request for Public Comment," (http://regulations.justia.com/regulations/fedreg/2014/03/17/2014-05711.html) by explaining why terrestrial radio should pay more in royalty payments.

The RIAA writes, "With these objectives in mind, we propose to replace the current overlapping musical work licensing systems with a single, simple and efficient system that incorporates marketplace royalty payments. As described below, such a system would have many potential advantages, including: (1) market rates for publishers and songwriters; (2) more consumer choice through easier funding and development of innovative services; (3) more revenue for services and higher royalties for creators due to savings from simplified licensing procedures; (4) improved accuracy of payments and transparency for publishers and songwriters; and (5) viability for ASCAP and BMI, and the revenue streams they administer."

Targeting radio, they continue, "Although our principal focus in these Comments is on the licensing of musical works, there also should be some changes in the law relating to sound recordings. Most importantly, as the Office has advocated for decades, 1 the performance right exemption for use of sound recordings by terrestrial radio in the U.S. should be eliminated. In addition, we believe that lessons learned after almost 20 years' experience with the sound recording statutory licenses suggest that those licenses should be adjusted in certain respects."

Explaining the history of the current system, the RIAA continues, "The current U.S. systems for musical work licensing were designed to address the needs of the early twentieth century, when the music publishing business shifted from one dominated by the sale of sheet music as a stand-alone product and live performances, to a business where musical works were primarily licensed for use in the form of finished sound recordings that were either sold in a physical format or performed on terrestrial radio."

"Rather than allow controversy over performance licensing of music products to unravel a system that seems to be working for the radio and television broadcasts and live venues that constitute the vast majority of the PROs' business, reproduction, distribution and performance rights for music products should be rolled into a consolidated licensing system. It makes no sense to have three entirely separate processes for setting rates, licensing and paying for a single set of activities," explains the RIAA. "First, U.S. terrestrial radio enjoys an unfair exemption from the sound recording performance right. U.S. Radio broadcasters use sound recordings to their commercial advantage and should pay for that privilege just like other types of services. The absence of a performance right as to broadcast radio also distorts the international flow of sound recording royalties, because it prevents U.S. artists and record companies from collecting royalties accrued for foreign radio broadcasts of U.S. sound recordings."

They sum up, "U.S. terrestrial radio broadcasters enjoy an unfair exemption from the sound recording performance right. In addition to the fundamental unfairness of their using copyrighted sound recordings without paying, the absence of a terrestrial performance right in the U.S. prevents U.S. copyright owners and performers from collecting accrued royalties for foreign radio broadcasts of U.S. sound recordings. The absence of a terrestrial performance right also skews the relationship between sound recordings and musical works."