Friday, March 27, 2009

4.26.09 ROYALTY



The March 2009 edition of CRUMBS Night Out is happening, well, tonight, if you’re reading this on Thursday March 26, at the Linda Norris Auditorium on Central Avenue. The fun starts at 7 with a set from Albany’s Sea of Trees, riding the release of their debut album Animal Sounds. At 8 the music biz panel of myself, attorney Paul Czech and our old pal Peter Iselin will talk (and answer your questions) about how songwriters make money, at least hypothetically! You’ve seen the names ASCAP, BMI, and SESAC, but do you know what these organizations do? And who’s Harry Fox and what’s he doing with that agency of his? We’ll try our level best to explain it all, and no, Harry Fox is NOT going to be there to explain himself. I have no idea how that got out there. I don’t even know if there is a real Harry Fox, or whether he’s just some kind of weird cultural icon, like the patron saint of troubadours or something.

On a related note, there’s some legislation before Congress you should know about, and if you ask me, you should support as well. The House Judiciary committee recently held hearings on bill HR 848, legislation with the droll name “The Performance Rights Act.” The bill provides for the creation of a “performance right” for sound recordings. And what does that mean, you ask?

Well, I’ll tell you. Until 1972, the federal copyright laws didn’t protect sound recordings. Compositions, the songs, had been protected since the 1800’s, but records, nope. If somebody bootlegged an album, a record company would have to chase the pirates around the state courts and rely on a patchwork quilt of state statutes and common law to get justice. It was awful. Then in 1972, Congress finally got around to dealing with the issue, and was faced with a huge push-back from the broadcasting industry. You see, traditional copyright gives the copyright holder rights not only in making copies of a work but in the performance of the work as well. So by giving copyright status to sound recordings, the record companies would then be able to demand payment for the non-private playing of records, like on the radio.

The broadcast lobby prevailed on Congress to make a bizarre exception to the law, to create federal copyright protection for sound recordings, except with no performance right. The given rationale for this odd little law was that since radio airplay promoted the sale of albums, radio shouldn’t be expected to pay record companies a royalty in addition to providing a nice promotional service. Never mind that for every other type of creative work, the performance right is perfectly OK, whether the performance promotes sales of copies of the work or not. The broadcast lobby convinced Congress that recordings were different.

So ever since we’ve had this weird situation where radio stations pay songwriters royalties for playing music on the air (through ASCAP / BMI /SESAC) but not then record companies / musicians (and, at least hypothetically, musicians). So when you hear “Respect” on the radio, Otis Redding gets paid, but not Aretha. Dumb, huh?

But wait, it gets dumber. In the 1990’s, the internet came along, and the broadcast lobby (now with help from the record companies), were afraid of competition from the internet and satellite radio, so they convinced Congress that digital transmission of recordings were different than terrestrial radio, and created a performance right for digital radio. That’s right. Webcasters and satellite radio now pay royalties to not just songwriters, but record companies and musicians as well, while broadcast radio continues its free ride.

One nice aspect of the digital royalty program is that record companies get 50% of this revenue, while the featured musicians on the recordings get 45%, and back-up musicians get 5%. For many musicians, who either signed bad deals or have otherwise been ripped off by their record companies, this digital performance money is the first time they’re seen since getting paid maybe a measly advance or session fee way back when.

Meantime, every other country in the civilized world has long collected performance royalties on recordings from radio. But none of these countries will pay U.S. record companies or performers any of this money, because we don’t collect these royalties for their artists.

The Performance Rights Act seeks to rectify this, to create a performance right and royalty stream for terrestrial (broadcast) radio performances of sound recordings, to bring us in line with the rest of the world, and to compensate record companies and musicians for the use of their works. The old argument that “radio promotes sales” is looking pretty weak these days, since there ain’t much sales of recorded music going on, radio or no.

The broadcast lobby is, as you’d expect, apoplectic over the bill, appealing to the ignoramuses among us by labeling the performance right royalty a government-imposed “tax” of good all-American business. Nonsense. It levels the playing field with digital radio, it brings us into conformance with the rest of the world, and in so doing it loosens up millions of dollars all over the world that should be flowing to U.S. record companies and musicians. It’s long overdue.

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