On Monday, April 13, Reps. Jerrold Nadler (D-NY), Marsha Blackburn (R-TN.), John Conyers Jr. (D-MI.), and Ted Deutch (D-FL.) introduced the Fair Play Fair Pay Act of 2015—a bill that, if passed, would accomplish a handful of things. The centerpiece of the legislation is the establishment of a public performance right for AM/FM radio. This would mean that performers and labels would be able to receive compensation for terrestrial radio airplay, a right that already exists in the rest of the developed world.
Currently, only songwriters and publishers are paid when music is “performed” on AM/FM radio. Stations are not legally obligated to pay a dime to recording artists and sound copyright owners (usually the label, but sometimes the artist). FMC has long supported a public performance right for terrestrial radio, and we’re glad to see a new bill introduced that would close this egregious loophole in US copyright law.
As we mentioned above, the Fair Play Fair Pay Act has additional moving pieces. Below, we will take a look at what the bill does and explain how it would impact musicians and the industry in general. After all, one of the reasons you come here is to learn what’s actually in a piece of proposed legislation.
The Fair Pay Fair Play Act:
The bill amends Section 106(6) of the Copyright Act to eliminate the distinctions between different kinds of radio—Internet, satellite or over-the-air—with regard to who they pay. This means that an AM/FM station would have to pay artists and labels just like newer forms of radio are obliged to do. The fix is accomplished by simply striking the word “digital” in reference to “digital audio” so that it simply reads “audio.” That is is a welcome change, and one that we 100 percent support.
The Fair Play Fair Pay Act would also establish a “minimum fee” to be paid by each type of service that plays music. The specific amounts are based on distinctions regarding how a service uses the music, including the “quantity and nature” of the use, as well as “the degree to which use of the service may substitute for or may promote the use of phonorecords by consumers.” Going further, the bill instructs the Copyright Royalty Board (CRB) to consider whether a use “may interfere with or may enhance the sound recording copyright owner’s other streams of revenue from the copyright owner’s sound recordings.” We certainly understand why this could be a factor in determining rates, but it could also be a way to single out webcasters like Pandora, whose “stations” are customizable to listening preference. We wonder if the language of the bill will open a can of worms about what does or doesn’t constitute “interactivity” on a service, and what impact this might have on services yet to be introduced. That said, we think it is more reasonable for the CRB judges to make a determination than to have it frozen in statute.
The bill proposes an additional standard of evaluation that may be likewise difficult to quantify. Fair Play Fair Pay calls for the CRB to to consider “relative roles of the copyright owner and the transmitting entity in the copyrighted work and the service made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, and risk.” Given that both labels and services likely see themselves as making the greatest contributions and carrying the most risk, it could further complicate how CRB judges make determinations.
The bill would permit the CRB judges to consider rates and terms from comparable audio services along with voluntary license agreements (aka direct deals). There’s no additional specificity about what evidence is permissible or prohibited. But in general, this seems to be an attempt at establishing greater parity in rate-setting for different categories of service. And that’s a worthy goal.
Remember the Internet Radio Fairness Act, which would have moved webcasters from a willing seller, willing buyer standard to that paid by satellite radio? This is essentially the reverse of that. Specifically—and here’s where your eyes glaze over—the bill would eliminate any connection between 801(b) and 114(f)(1)(B) for the purposes of rate-setting. This would seem to indicate that that Sirius/XM and non-interactive cable audio transmissions (like those weird stations at the high end of your cable dial that pay music but not videos) would pay under the same standard as Pandora. (Keep in mind that 801(b) would still govern the setting of the mechanical royalty rates for musical works.)
The Fair Play Fair Pay Act includes important protections for small broadcasters, public broadcasters, non-commercial and college radio. This means that they wouldn’t be overly burdened by the enactment of an AM/FM performance right. Small commercial stations would pay a royalty rate of $500 per year if their annual revenue amounts to less than 1,000,000. An individual, FCC-designated public broadcasting station would pay $100 per year. These limits are welcome—after all, it’s the smaller and noncommercial broadcasters who are the most adventurous in terms of playlists. We’re less excited about the complete exemption for religious broadcasters, some of whom are quite large. We’d like to think that most faith traditions would support treating artists fairly. This provision falls short of such values.
This is hugely important and something that we wholeheartedly endorse. The bill would maintain the splits and direct payment (via SoundExchange) for any direct deals between a label and a service, provided that the service is otherwise eligible for the statutory license. This breaks down to: 45 percent for the featured performer (or band); 5 percent for background musicians and vocalists; and 50 percent to the sound copyright owner (again, usually the label but sometimes the artist). The bill’s language, however, explicitly prohibits any additional revenue from going to the artist (at least as a matter of federal law). This means that, under a direct deal, artists will not benefit from a label’s equity shares in a service, money from cash advances or non-play related income that is divvied up by market share. Fairness only goes so far in 2015.
Like the earlier RESPECT Act, this new bill would establish a public performance right for recordings made before 1972. Due to a weird loophole in the law, there is no federal copyright protection for sound recordings before February 15, 1972 (though some states do recognize a copyright in recordings). FMC wants ALL artists to be paid when their music is used, regardless of their age. However, Fair Play Fair Pay Act does not confer any of the other exclusive rights that an artist might enjoy from federal recognition of their works. This includes the ability to recapture their copyrights after a set term. This is why FMC continues to endorse—alongside the United States Copyright Office—the full federalization of pre-’72 sound recordings. Still, we are pleased that this “partial fix” would apply to any radio or radio-like service, meaning that it’s platform neutral: AM/FM radio pays, satellite radio pays, cable radio pays, Internet radio pays.
Publishers are currently requesting that the government allow evidence from rate-setting around sound recordings to be admissible their own proceedings. The reason is obvious: the rates are considerably higher for recordings. This bill is silent on that request, but it does prohibit sound recording rates to be used as evidence to achieve LOWER rates for musical works licensed for public performance.
The new bill essentially folds in an only slightly less-new piece of legislation, the AMP Act. The important thing to know is that both bills would offer artists an easier way to designate a portion of their performance royalties to producers and engineers if there is a “Letter of Direction” from the artist. Like the AMP Act, the Fair Play Fair Pay Act would also establish a protocol for assigning 2 percent of performance royalties for recordings made before 1995 provided that a reasonable attempt was made by the studio professional to obtain a Letter of Direction from the artist.
That’s a lot to digest in one bill! There’s a lot to love about the Fair Pay Fair Play Act, and a few areas where more could be done for creators. For now, musicians should feel good that there’s forward motion on a some important matters related to their compensation. We applaud the bill’s sponsors for being willing to tackle issues that have frustrated musicians and independent labels for too long. We’ll be tracking.