Performance Royalties at Last?

Rep. Mel Watt, D-NC., introduced the Free Market Royalty Act to Congress September 30, 2013.

(from Billboard Magazine, October 7, 2013) On September 30, Representative Mel Watt, D-N.C., introduced the Free Market Royalty Act to Congress. This act would replace government intervention with free-market negotiations and would deliver a desired performance right to ensure payment of broadcast radio royalties to record labels and performing artists in the United States for the first time.

Watt has been seen as a music industry supporter for a long time. When he introduced the bill, he said in a statement, “For many stations, take away the music and you take away the audience.” In 2009, he introduced a similar bill known as the Performance Right Act. This bill was stalled in both the house and the senate. Unlike the PRA, the FMRA he recently introduced establishes only a performance right and doesn’t set any rates.

Musical works already have a performance right such as the one Watt proposes. Copyrights also have rights for digital performance, reproductions, and synchronizations. For a long time, broadcast radio has created nothing but a promotional platform for labels and artists.

The bill also dissolves the compulsory license used by digital services such as Pandora and creates a one-stop shop where buyers of non-interactive licenses can get collectively negotiated fees. The FMRA named SoundExchange on the bill to collect and distribute royalties for all non-interactive broadcast and digital services, so they would be the likely party to represent artists and labels in negotiations.

One thing that wouldn’t change from the bill is how the royalties are split; today digital performance royalties are split so that 50% goes to sound recording owners, 45% is sent to performing artists, and 5% is given to non-featured performing artists.

Previous bills have failed to establish a performance right or change how digital royalties are set. The FRMA may not make it out of committee, but it has a chance to affect the record business for decades to come. The bill ultimately shows Congress wants to step aside and let this market find its own way.