The Reasoned Debates Over Performance Royalties

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Senator Dianne Feinstein presided over a rather well-mannered debate on terrestrial radio royalties on Tuesday, though the arguments continued to grow in their complexity.

Recording royalty advocates like Sheila E., Marion Leighton-Levy, Senator Patrick Leahy, and Feinstein herself pushed for a modified rate structure, and continued to highlight a disparity between the royalty structure of United States versus other industrialized nations.  “I have found over many decades that protecting copyright and patent interests are really important because it encourages the development of the industries that these copyrights and patents relate to,” Feinstein stated.

But of course, the debate is far more complicated than that.  Steve Newberry of the National Association of Broadcasters (NAB) pointed to the value that radio stations offer performers, part of a long-running “partnership” that produces benefits like recognition, awareness, and downstream sales of recordings, tickets, and merchandise.  “The performers are compensated through this partnership that we’ve have for over eighty years,” Newberry countered.  “[Labels] have spent millions of dollars to get their songs aired on the radio because they know that it creates money for them.”

Anyway, these are well-worn debates to the stakeholders involved, or for those closely following the action.  But the hearings also featured some tangential, yet critical, issues.  That includes a push for parity by the online radio sector, as represented by RealNetworks’ executive Bob Kimball.  The parity push received heavy consideration, and raised the importance of a broader, more comprehensive royalty discussion given the explosion in newer formats over the past ten years.

Other issues also surfaced.  James Winston, head of the National Association of Black Owned Broadcasters, portrayed a minority-owned station group struggling for its existence.  According to Winston, financial damages are being created by massive and inflexible lending banks, as well as skewed ratings measurements from Arbitron.  “It is my hope that once you understand the current plight of minority broadcasters, you will understand why it is impossible for us to pay additional copyright royalties,” Winston relayed.  “The damages to minority broadcasters are not theoretical, they are real, quantifiable, and devastating.”

Report by publisher Paul Resnikoff.