As news of new AM/FM royalty bill hits, CC announces latest revenue share deal with indie label

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Issue Date: 
Jul 25 2013 - 12:40pm

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Several sources are reporting that North Carolina Representative Mel Watt (D) (pictured) said today he will soon introduce new legislation to require U.S. broadcasters to pay royalties for their broadcast use of copyright sound recordings.

Watt told colleagues at a House Judiciary Committee hearing this morning he plans to introduce a bill before the House recess next month.

The National Association of Broadcasters immediately responded. EVP Communications Dennis Wharton called the legislation "a new performance tax that would kill jobs at America's hometown radio stations while diverting millions of dollars to offshore record labels." The NAB supports a non-binding resolution in both chambers of Congress, called the Local Radio Freedom Act, opposing charging radio for the recordings they play.

Unlike other forms of radio (Internet, satellite, cable) -- and unlike broadcasters in most other parts of the world -- U.S. terrestrial radio is not obligated to pay the copyright owners for the use of sound recordings they broadcast (only for compositions). Broadcasters do pay these royalties for online streaming.

The music industry in recent years has stepped up efforts to, in its terms, "correct" this "historical anomoly" and strongly supports Congressional action to require royalties for AM/FM radio. Meanwhile, operators of new forms of radio, saddled with sound recording performance royalties amounting to large percentages of revenues, say broadcasters' exemption makes fair competition impossible.

The NAB says is supports "private, company-by-company negotiations that are driven by the free market," for the use of recorded music. Today Clear Channel announced it has reached an agreement with indie music label Innovative Leisure "that will enable Innovative Leisure's artists to share in broadcast and digital revenue." It's the latest of a series of deals struck by Clear Channel (and a handful of other broadcasters) with independent label groups. Though the terms are never made public, it's understood that, in exchange for a discount (or waiver) on streaming royalties, the radio groups will pay a small royalty for on-air play of the label's music (which they call a "share of advertising revenue").

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