Performance Rights Act: Tradition vs. the Digital Age

The Performance Rights Act (PRA) will compensate recording artists and master sound recording owners (artists) when terrestrial radio stations (radio stations) play their music.  The US is one of few countries to not pay artists when radio stations play their music, placing the US alongside China, North Korea, Iran and Rwanda.[1] Aside from this negative association, American artists are missing out on potential income derived from foreign airplay.[2] Since American radio stations do not pay artists for airplay, countries that statutorily require radio stations to pay artists for airplay refuse to pay American artists because of the lack of reciprocity.[3] American artists, as well as the American economy, could generate a multitude of additional revenues if only the US would enact the PRA.

Dissenters worry about PRA revenues flowing abroad, since three of the big four are foreign owned, and since recording deals generally require artists to sign over ownership in master recordings.[4] These arguments disregard the revenues that will flow into the US by foreign radio stations, and fails to justify why artists are not paid the percentage they would be entitled to under the PRA.   Additionally, many artists are beginning to negotiate with record labels in order to retain ownership in master recordings,[5] deemphasizing the argument that PRA revenues will flow abroad.

In this economy, the PRA will spur creativity.  Artists will create music if they are able to make a living off of their creations.  Music sales have been declining drastically over recent years,[6] meaning that radio stations are in dire need of new, profit-generating business models.  Traditionally, radio stations provided free promotion to artists.  However, this tradition fails to keep up with the digital age. Consumer demands have significantly changed, weakening radio stations promotional abilities.   An outdated line of reasoning should not deprive artists of fair compensation, particularly when there is no justification for doing so.

Radio airplay reaches over 235 million listeners a week,[7] which arguably shows the great number of listeners who hear new music via airplay.  However, studies show that there is a negative correlation between listenership and overall record sales.[8] Studies suggest that listeners use radio airplay as a substitute for actually purchasing albums, and that a one hour decrease in listening to the radio would increase record sales by .75 albums per person – a 30% increase.[9] Statistical data reveals that radio stations no longer provide free promotion.

Radio stations that play contemporary and/or religious music – about 80% of all radio stations – will be affected by the PRA.[10] Coincidentally, these same radio stations are facing a decline in advertising revenues.[11] The decline in advertising revenues fails to justify why artists should remain unpaid.  Marybeth Peters, the Register of Copyrights, so meaningfully stated that radio stations “can use the music as a hook to get listeners and, by extension, profit-generating advertising dollars.”[12] Radio stations fail to acknowledge the promotional value that music provides.  If listeners tune in to radio stations for the music, radio stations should pay artists for the service that artists are providing for the radio stations.  Even with the decline in advertising dollars, radio stations are still making billions of dollars annually from broadcasting music – music which draws in listenership and, ultimately, advertising dollars.

This anomaly shines light on the past exploitation of artists who signed shady recording and publishing deals decades ago.  This exploitative trend especially affects Black artists who signed deals in the 1960s.  These artists are still being exploited by radio stations that currently play their music, while the artists are unable to afford retirement, unable to pay hospital bills and/or unable to afford a comfortable life.[13] Although recording and publishing deals are becoming friendlier towards artists, artists are still not paid by radio stations.

Arguments against the PRA seem unreasonable when looking at the success of competing and lucrative digital, cable and satellite radio stations.  Coincidently, these stations are already statutorily required to pay artists.  These stations are able to pay artists while profiting, dismissing most dissenters’ arguments.  Additionally, why are artists penalized solely based on the mode of transmission of their music?  If a station is simultaneously broadcasting via analog radio and online, the artist is royalties from the online transmission but is not paid royalties for the terrestrial transmission.[14] One cannot justify not paying artists merely because a listener chooses to tune in to the broadcast via analog radio rather than via Internet, especially since the same radio broadcast is in question.

The proposed royalty scale under the PRA is quite reasonable.  The PRA’s royalty scale ranges from $500 upward,[15] allowing small radio stations to support artists without the fear of blackout or converting to talk formats.  Bigger radio stations will carry the bulk of the PRA’s annual intake, as they carry the bulk of listenership, but the royalty rates will be reasonably determined either through negotiations or by the Copyright Royalty Board.[16] Furthermore, the proposed grace period – ranging from one year for big stations to three years for small stations – reasonably allows radio stations to budget for, set aside funds or fundraise in order to comply with the PRA.

I do agree with several of the congressmen who signed The Local Radio Freedom Act.  I make the distinction that I do not agree with this act itself, which is “a nonbinding resolution that denounces any new performance fee, tax, royalty or other charge on radio for music airplay,”[17] but the public needs more information about the effects of the PRA .  Many of The Local Radio Freedom Act’s signatories seek information regarding the impact that the PRA will have on local broadcasters and local communities – namely the effects of the PRA on the public interest standard.[18] If the public is adequately and truthfully informed, then congressmen will be better equipped to serve their respective artistic communities.

Dissenters argue that the PRA destroys the public interest standard because radio stations must remain profitable in order to serve the community.[19] I cannot fathom how Congress would intend to exploit one fraction of society in order to benefit another, in such a way that a private business sector exceedingly profits.  Radio stations must stay in business in order to serve the public, but artists deserve compensation.  Artists should not suffer because radio stations refuse to develop new ways to generate profits and retain listenership.

I do sympathize with radio stations because the digital age is drastically changing and potentially killing off the industry.  However, I sympathize more passionately with the exploited artists.  I believe that everyone should profit from their talents, if they so choose.  I also believe that radio stations do not deserve gracious compensation and rewards for playing music without paying artists.   I think that it is the time to revoke radio stations’ free pass to free music, and time to pay artists for their work.


[1] Philippa Thomas, US artists demand radio royalties, http://news.bbc.co.uk/2/hi/americas/8108379.stm.

[2] Performance Rights Act Bill Introduced in the Senate, http://news.ecoustics.com/bbs/messages/10381/549087.html.

[3] Id.

[4] Ed Christman, Performance Right Act Reintroduced To Congress, http://www.billboard.biz/bbbiz/content_display/industry/e3i040c1ac9536ad53cd5b20962dcf8d5b8.   The “big four” are the four biggest record companies, consisting of The EMI Group, Sony Music Entertainment, Warner Music Group and Universal Music Group.  The former three groups are internationally owned.

[5] Dahleen Glanton, Rift Over Royalties, http://www.chicagotribune.com/entertainment/chi-0826-radioaug26,0,310502.story.

[6] Marybeth Peters, Ensuring Artists Fair Compensation: Updating the Performance Right and Platform Parity for the 21st Century, http://www.copyright.gov/docs/regstat073107.html.

[7]Kristina Sherry, For more than 80 years, commercial radio stations have aired songs without paying royalties to artists, but a bill making its way through Congress would change that, http://articles.latimes.com/2009/jul/03/business/fi-ct-radio3.

[8] Stan Liebowitz, Statement before the Committee on the Judiciary Regarding HR 848, “The Performance Rights Act”, http://judiciary.house.gov/hearings/pdf/Liebowitz090310.pdf.

[9] Id.

[10] Performance Rights Act Bill Introduced in the Senate, supra, note 2.

[11] Glanton, supra, note 5.

[12] Peters, supra, note 6.

[13] Dahleen Glanton, supra, note 5.

[14] Peters, supra, note 6.

[15] Ted Johnson, Outline of Performance Rights Act, http://www.variety.com/article/VR1118006781.html?categoryid=1064&cs=1.

[16] Id.

[17] Katy Bachman, House Democrats Cite Concerns Over Performance Rights Act, http://www.billboard.biz/bbbiz/content_display/industry/e3id0ab56d6654273d1bf8cf8097f28fbb2.

[18] Id.  The public interest standard describes the necessity to have free radio in order to educate and inform communities.

[19] Dennis Wharton, NAB to FCC: musicFirst Complaint Nothing More Than Public Relations Ploy, http://www.nab.org/AM/Template.cfm?Section=Press_Releases1&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=14907.

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