House IP Subcommittee Holds Hearing on the American Music Fairness Act
On June 26, the House Judiciary Committee, Subcommittee on Courts, Intellectual Property, and the Internet held a hearing titled “Radio, Music, and Copyright: 100 Years of Inequity for Recording Artists.” The hearing examined a longstanding anomaly in the music industry: the fact that recording artists do not get paid when their songs are aired over terrestrial AM/FM radio. Under the current copyright regime, sound recordings do not have a terrestrial broadcast right, meaning that when a copyrighted sound recording is played over AM/FM radio, the sound recording copyright holder does not get a performance royalty. Under the “American Music Fairness Act” (AMFA), sound recordings would be given a terrestrial broadcast right, requiring broadcasters to pay royalties to sound recording copyright owners.
Adding a terrestrial broadcast right for sound recordings is something the sound recording industry and recording artists have been fighting unsuccessfully almost for 80 years. The hearing showcased strong support for the bill amongst stakeholders and members of the Subcommittee. Testifying on the sound recording side was legendary country and gospel musician, Randy Travis and his wife Mary Travis. The couple testified in support of AMFA alongside SoundExchange CEO, Michael Huppe. Testifying in opposition to the bill was the National Association of Broadcaster’s (NAB) CEO, Cutis Legeyt and Regional Vice President of Radio One, Eddie Harrel.
Opening Statements
Chairman of the Subcommittee Darrel Issa (R-CA) opened the hearing, recognizing the “invaluable role that radio plays in American history” by bringing Americans the news, weather, and sports. However, he emphasized that when news, weather, and sports are broadcasted over AM/FM radio, those radio stations “pay for those words to be spoken”; a sentiment that would be echoed through the rest of the hearing. Chairman Issa used a notable example, explaining that Frank Sinatra once stood before Congress to support a terrestrial broadcast right, “not because he wanted the money, but because he had earned it.” It’s a sentiment that holds true for recording artists to this day and one that would be emphasized by Randy Travis, Mary Travis, Michael Huppe, and many members of the Subcommittee.
Randy and Mary Travis
Randy Travis is an iconic gospel and country singer/songwriter, whose accolades are far too great to summarize in this blog. In 2013, Randy Travis suffered from a stroke leaving him unable to walk or speak. As a result, Randy’s wife, Mary, delivered a powerful testimony on his behalf, emphasizing music is “Randy’s lifeline,” although “that lifeline has changed.” She explained that consumers are no longer rushing to “buy concerts and t-shirts,” but instead are playing music through services that pay artists fractions of a penny per stream. She also noted that, while the musical consumption landscape has changed, “one thing remains the same…the voice is still the mandatory bridge between the writer and the listener.” Therefore, according to Mrs. Travis, it is time to do right by those who bring the emotion, melodies, and soul to music and to compensate them for it.
Curtis Legeyt
Testifying next was Cutis Legeyt, who started his testimony by highlighting the important role radio plays in American society, e.g. “inform[ing], educat[ing], and alert[ing] listeners to important events and emergencies.” He also emphasized the symbiotic relationship that has been fostered, for decades, between the recording and broadcast industry, asking the audience to reminisce on “the countless artists, whose careers were made, when their first songs were play on our airways.” Mr. Legeyt then stressed that while the musical landscape has changed, radio play continues to drive music discovery for both new musicians and legacy artists. Legeyt argued that AMFA would “undermine our mutually beneficial relationship” by imposing a “financially untenable” royalty for broadcasters of all sizes, since radio already invests so much in finding on-air talent, updating broadcasting equipment, and paying royalties to songwriters through performing rights organizations (PROs) like BMI, ASCAP, and SoundExchange. He concluded that Congress should not impose “the recording industries one sided radio proposal.”
Michael Huppe
Michael Huppe’s opening statement pushed back on a few major points made by the broadcasting industry. First, Mr. Huppe noted that it is an “embarrassment” that the United States is the “only democratic nation in the world without a performance right on AM/FM radio.” Mr. Huppe characterized the broadcasting industry actions as “an unpermissioned taking” since the broadcasting industry generates 15 billion dollars in revenue. He continued to pushback on Mr. Legeyt’s promotional relationship argument by explaining that “72 percent of music played on the radio today is not new music.” Moreover, other promotional activities, like broadcasting a baseball game and adapting a book into a movie requires broadcasters to obtain a license. Mr. Huppe stated that when music is played overseas, artists lose an estimated “300 million dollars in royalties.” While those overseas nations collect royalties, they are not paid out to artist in the United States. He concluded by telling Congress that during the time of the hearing, over 200,000 songs will be played on terrestrial radio, and those recording artists who make up Congresspeople’s constituents, neighbors, family and friends will not be paid.
Eddie Harrel
Last to testify was Eddie Harrel. Mr. Harrel, the regional vice president of Radio One, who offered an insider perspective as to why Congress should not adopt a terrestrial right for sound recordings. Mr. Harrel’s testimony focused on how local broadcasting is a pillar of his and many others’ communities, and how added costs to broadcasting stations would result in a decrease of investments in those communities. Mr. Harrel argued, just as Mr. Legeyt had, that recording artists benefit from the exposure and promotion that broadcasters provide. To illustrate the point, Mr. Harrel explained that through a local radio concert, Summer Jam, the world was introduced to the now highly successful hip-hop group Migos.
Questions by Subcommittee Members
Congressman Fitzgerald
Congressman Scott Fitzgerald (R-WI) asked the panel of witnesses whether passing AMFA would be the first step in doing away with “all transmission and retransmission exemptions in digital performance rights” granted in the 1995 Soud Recordings Act. Mr. Huppe responded that “it is, has, and will always be about terrestrial radio and making sure that everybody gets paid fairly, for their content.” Huppe added that AMFA would ensure that broadcasters “do not get a break” from paying what their competitors must. Congressman Fitzgerald then scrutinized overseas performance royalties and asked whether record labels are collecting sound recordings royalties overseas. Mr. Legeyt said he supported broadcasters paying out royalties in other countries but also said that any comparison of the United States “broadcast recording industry relationship …. to that of any other country is unfair.” Moreover, Mr. Legeyt pushed back on the notion that there are 300 million dollars in royalties lost overseas, arguing that the broadcasting industry has been unable to substantiate that number.
Congressman Nadler
Next to question the witness was Chairman of the full Judiciary Committee Jerry Nadler (D-NY), and he started off by asking Mary and Randy Travis what opening another channel of royalty income would mean to them. Mary stated that since Randy’s stroke, royalties have been what the couple “has counted on for income.” She emphasized the couple is testifying today not only on behalf of musicians of Randy’s generation, but all past and present, who deserve to be compensated for their music. Moreover, she explained that the newer generation of musicians are more working class, meaning they, like Mary and Randy, depend on royalties to support their families and to continue pursuing their careers in music. Mr. Nadler then asked Mr. Huppe if AMFA adequately accounts for the ability of small broadcasters to pay additional royalties. Mr. Huppe answered in the affirmative, noting that AMFA would require small broadcasters who make 1.5 million dollars or less annually to only pay $500 in royalties a year.
Congresswoman Lofgren
Congresswoman Zoe Lofgren (D-CA) asked whether there might be unintended consequences if AMFA was passed, specifically whether emergency broadcast services would be jeopardized. First, Mr. Legeyt argued that comparisons shouldn’t be made to other countries that pay sound recording royalties and also successfully fund emergency broadcast services. He supported his contention by noting that “there is no comparison to the U.S. locally focused, freely available broadcast model in any other country.” Mr. Huppe argued that it shouldn’t be hard for local stations to fund emergency services and pay recording artists because there are plenty of stations that pay for talk radio talent and sports content and still manage to make a profit.
Congressman Moran
Congressman Nathaniel Moran (R-TX) prefaced his questions by underscoring the importance of radio in his rural east-Texas community. First, Congressman Moran probed the broadcasting industry on their promotional efforts and their relationship with the recording industry. Mr. Legeyt responded by highlighting the uniqueness of broadcast stations, explaining that each station fosters a relationship with its community, which other mediums cannot do. Moreover, Legeyt explained that because terrestrial radio is free, it is more widely available and thus enhances promotion for musicians. Mr. Legeyt quantified the promotional efforts to an estimated 2.4 billion dollars. Mr. Harrel then mentioned that “new artists, existing artists, [and] stars” are asking to play their music on radio stations. Mr. Harrel, when asked about the monetary cost, said that radio station will have to make “tough decisions” with any new expenses.
Congresswoman Lee
Congresswoman Laurel Lee (R-FL) focused her questions on the distinction between foreign nations and the United States, when it comes to a performance right. Mr. Huppe repeated his earlier sentiment, that the “U.S. stands alone in the industrialized world as the only democratic nation that does not pay performance right for terrestrial radio.” As a result, Huppe explained that many countries “do not pay us that similar right,” and artists are losing out on almost 300 million dollars a year. Congresswoman Lee then asked Mr. Huppe if he could foresee any procedural amendments needing to be adopted if AMFA is passed. Mr. Huppe answered in the negative, noting that AMFA is “a simple law, as laws go.”
Congressman Massie
Congressman Thomas Massie’s (R-KY) main question was aimed at finding a compromise between broadcasters and sound recording industry, asking whether there was a “free-market solution” to the issue at hand. He asked Mr. Legeyt if it’s feasible for artists to be able to negotiate licensing fees with local stations, to which Mr. Legeyt responded in the negative. Mr. Legeyt told Congressman Massie that there are 15,000 stations across the country with different ownerships groups and therefore the Copyright Royalty Board (CRB), which he described as a “one-stop shop,” has its efficiencies.
Ranking Member Johnson
After a brief recess, Ranking Member Hank Johnson (D-GA) asked Mr. Huppe to explain how AMFA would not hurt local broadcast stations that are weathering technological changes to the industry. Mr. Huppe again explained that small local stations are accommodated in the bill because the royalties they pay annually are capped. Mr. Legeyt responded by claiming that if you apply the current CRB streaming framework to terrestrial radio, stations will have to pay millions upon millions in performance royalties. Mr. Huppe pushed back stating that when the CRB sets rates, factors such as licensee contributions and promotional value, are considered.
Congressman Cline
Congressman Ben Cline (R-VA) asked Mary and Randy Travis whether the “shift in listeners ways of finding music affected the balance between the benefit of radio play and the balance of royalties.” Mary stated that streaming music sometimes pays well, but there are still millions of dollars that artists are missing out on. Mrs. Travis conceded that many radio stations are small businesses but stated that artists are small businesses as well and when they are not paid what they are owed “it can be hard to make ends meet.”
Congressman Ivey
Congressman Glenn Ivey’s (D-MD) first asked Mr. Huppe how Spotify licenses music. Mr. Huppe explained that Spotify operates under direct licenses with copyright owners of sound recordings. Mr. Legeyt then said that, unlike Spotify, local broadcasters can’t charge subscription fees and they cannot nationalize their services, lest they lose their competitive advantage.
Congressman Fry
Congressman Russell Fry (R-SC) asked Mrs. Travis her thoughts on the repercussions that a performance royalty for terrestrial play would have on local broadcasting stations. She stated that radio stations would “not fall apart if they had to share their royalties” and that she thinks it would increase their listenership and revenue. Mrs. Travis also noted that artists participate in and organize similar community efforts as local broadcasters; they play charities and organize fundraisers and benefits.
Chairman Issa
Chairman Darrel Issa (R-CA) concluded the hearing with an intense line of questioning aimed at the broadcasters. He asked Mr. Legeyt if it’s true that NAB has “never made an offer to the performers that gave them a net increase in their revenue.” Mr. Legeyt argued that was not a fair categorization and reiterated that the sound recording industry’s claim that there is 300 million dollars of lost royalties hasn’t been substantiated. Chairman Issa said that NAB “did not offer one net penny…that their negotiations were on a net savings.” He added that if broadcasters can afford to pay NAB’s dues, then they should be able to make some offer to sound recording copyright owners.
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