The American Music Industry and the Performance Rights Act
Photo Credits: iacmusic
I worked with two (2) of the largest broadcast investment group in the United States. One of which was the US Radio Group which would eventually be divested. Most of its radio stations, its peak was in the 90’s, were sold to Clear Channel, Infiniti, CBS Radio and other media outfits. Music licenses was part of my responsibility. In fact, I think I still know people from BMI and ASCAP who I have worked with directly during those times.
I’m clueless on how artists are paid in the Philippines. I would assume it’s the same. But, have you ever wondered how songwriters, artists and musicians are getting paid in the United States? Well, before you call Oprah or David Foster, tone down your screaming and make it singing then you might have to read these three big performing rights organizations in the United States. They are BMI, ASCAP and/or SESAC.
What is BMI? ASCAP? SESAC?
Basically, they’re all the same. They are what you call the performing rights companies. What they do is collect music license fees on behalf of songwriters, composers and music publishers and distributes them as royalties to those members whose works have been performed on television and radio stations and networks; new media, including the Internet and mobile technologies such as ringtones and ringbacks; satellite audio services like XM and Sirius; nightclubs, discos, hotels, bars, restaurants and other venues; digital jukeboxes; and live concerts.
If you’re an international artist who wants representation in the United States, you can join any of these organizations and receive royalties for your music. That’s the basic.
Typically, what radio stations do, in their search for the great advertising dollars, they would tweak the programming of the radio station (music programming, I mean) and target certain demographics. This is where Arbitron comes into play. They’re a ratings company. They measure the reach of your radio station and the demographics. Then based on these ratings, radio stations would typically consolidate their efforts and strategies to focus on companies who wants to target that particular demographics. It’s targeted advertisement.
Now, before, or at least, many, many years ago, music labels would beg for radio stations to play their music. Beg, use of influence, you name it just so that the music could be heard on the airwaves. That’s when payola rocked the American music industry. Rumors have it that this was between BMI and ASCAP trying to dislodge each other. It’s an illegal practice of payment or any types of inducement or influence made by music labels so the radio stations could play their music just like any normal broadcast days.
Just when you think it’s over and done with and everybody learned some lessons, here’s the interesting part of what’s going on right now. While the music industry continues to rely on the radio to promote its product – music, It is very interesting now how they push for this proposed performance rights fee when in effect, they are essentially telling their advertisers to pay for the music and advertise with them. I find it confusing.
This is what’s rocking the US Senate. It’s the proposed Performance Rights Act which would create a royalty on radio stations. The Senate Judiciary Committee passed this the other day as they felt that it would not hurt the small minority owners. Interestingly, the proposal do not give artists the option of opting out of the royalty system. They also pushed back the implementation date.
Reaction?
NAB (National Association of Broadcasters) sponsored a survey and found that 75% of Americans don’t support a performance royalty. And 85% feel there’s a promotional value to artists who receive airplay.
The panel continues to deliberate on the bill and it’s like being in the marketplace with no-takers. At the moment, they have agreed to put the royalty’s new base fee at $100.
For those radio stations making less that $50,000 a year, they would pay an annual $100 flat fee.
Stations with revenues up to $1.25 million would also get a flat rate to be determined. Now, that’s just the base pay. They’re not telling you what comes after that.
The problem is that, if you put more price on the radio station – simple arithmetic will tell you that the cost will go up for everyone and the possibility that communities who rely on the radio to relay more important information could be affected. What are these information? You have the weather, national emergencies and hot issues and topics important to the community.
Radio’s contribution to unknown artists with great talents is unparalleled. And those real and genuine talents are what we’re looking for and what we wanted to hear. Not those “talents” who were able to be on the airwaves because they were able to “buy” the time. Newer artists especially those whose talents are real, will have such a difficulty to be heard.
That’s why I continue to blog. 
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So Reynz, nagkaroon ka din ba ng recording deal dati? Maganda naman ang boses mo dun sa podcast mo. Hehehhe.
ngak! wala ako sa studio. duna lang ako sa labas. hehehe! of course feeling ko ako yung nasa loob. heheh
In the news
For the past 70 years, radio has enjoyed a symbiotic relationship with the recording industry. The record labels and artists enjoy the free promotion of their music over the airwaves in a variety of venues, launching the careers of rising stars and ultimately increasing the profitability for the record labels.
Composers and songwriters are compensated through royalties collected by ASCAP, BMI and SESAC for the performance of their recorded music. The record labels and artists are compensated for their work in the sales of their recorded music, concert tickets and other promotional items.
In 1995 and 1998, Congress passed a limited performance tax on the digital delivery of recorded music, specifically to compensate record labels and artists for harm to record sales that might occur from downloading and recording digital music. Local AM and FM radio and non-digitally delivered music were specifically not taxed for many reasons, including Congress’ recognition of radio’s unique role in providing free entertainment, local news and public service programming designed to help the community, as well as the fact that radio play benefits rather than harms the revenues of the record labels.
Now, the record labels have come back to Congress asking to expand the performance tax to ALL public airings of recorded music, including radio, regardless of the fact that music broadcast on local radio cannot be captured for perfect reproduction and that such airplay actually helps make record labels profitable.
The Free Radio alliance has been formed to provide a united force in opposition to the recording industry’s efforts to subsidize their failing business model on the back of local radio stations and others that publicly air pre-recorded music.