House Committee Endorses Radio Royalties for Record Labels

Authored by Mark Hefflinger on June 27, 2008 - 10:59am.

Washington - The U.S. House Subcommittee on the Courts, the Internet and Intellectual Property yesterday approved the Performance Rights Act, which would for the first time compel AM and FM radio stations to pay record labels and musicians royalties to play their songs, on top of the current payments to songwriters and music publishers. "A loophole in the law lets AM and FM music radio stations earn $16 billion a year in advertising revenue without compensation the artists and musicians who bring music to life and listeners' ears to the radio dial. It's not right, it's not fair and we are going to make sure it is changed," said Doyle Bartlett, executive director of the MusicFIRST Coalition, a record label lobbying group.

Currently, radio stations outside the U.S. do pay royalties to record labels, as do satellite, Internet and other digital radio services in the U.S.

The National Association of Broadcasters (NAB), a radio trade group, is opposed to the legislation, which it estimates will compel U.S. stations to pay out up to $2.4 billion annually in new royalties.

The group has gathered as many as 219 House members to oppose the bill in a non-binding resolution.

"Despite today's action, there remains broad bipartisan resistance to the RIAA tax from members of Congress who question whether a punitive fee on American's hometown radio stations should be used to bail out the failing business model of foreign-owned record labels," said NAB executive vice president Dennis Wharton.

The Performance Rights Act would see small and public stations pay $5,000 annually to record labels and musicians; larger stations would pay higher royalties.

The bill now moves to the House Judiciary Committee and would then be heard in the full House; an identical Senate version of the bill is still pending.