Radio Stations Expected to Pay to Play Music

November 13, 2009

On October 15, 2009, the Senate Judiciary Committee approved the Performing Rights Act (S. 379). If signed into law, the Performing Rights Act will require radio stations to pay a performance fee on sound recordings played over the air. The House Judiciary Committee approved a similar bill (H.R. 848) on May 13, 2009. 

Historically, radio stations have not been required to pay for the right to play sound recordings over the air (as distinguished from the underlying musical compositions). In 1995, Congress granted sound recording owners a limited performance right when it enacted the Digital Performance Right in Sound Recordings Act (DPRA). The DPRA granted copyright owners the exclusive right to perform sound recordings by "digital audio transmission"—typically transmissions of audio recordings over the Internet. Broadcasting and related transmissions were specifically exempted from the DPRA. 

If the Performing Rights Act becomes law, radio stations will be required to pay for the right to play sound recordings over the air. Under the current version of the bill, radio stations will be eligible to obtain a statutory license under the Copyright Act, and lower licensing fees will be available for radio stations with small gross revenues and for public broadcasting entities. In addition, the legislation contains exemptions for religious services and incidental uses of sound recordings.  

As expected, organizations supporting rights holders reacted favorably to the Senate Judiciary Committee's approval of the bill. The musicFirst Coalition, which is supported by a broad spectrum of organizations representing artists, managers, labels, and performance right advocates, released a press release stating:

[t]oday we are one step closer to righting a wrong that has existed since the early days of radio; one step closer to winning the fight for fundamental justice that has been waged by countless artists and musicians over the last 80 years.

Meanwhile radio broadcasters strongly oppose the bill. The National Association of Broadcasters (NAB), which calls the legislation a performance tax and doesn't want to compensate the recording industry for what it sees as a failure to adapt its business models to the digital age, released a press release stating:

[i]n recent years, the record labels have seen sales of albums decline as more listeners opt for digital downloads. However, radio remains the number one promotional vehicle for music—it's not responsible for the label's resistance to the digital age, and it shouldn't be on the hook to fix it. 

As Performing Rights Act continues through the legislative process, we can expect to hear vigorous debate between rights holders and broadcasters.

For more information about this Legal Update, contact Melissa A. Kern, Nicolette R. Hudson or any other attorney in Frost Brown Todd's Intellectual Property Practice Group.

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