A Look Inside the Fair Play Fair Pay Act

On Monday, April 13, Reps. Jerrold Nadler (D-NY), Marsha Blackburn (R-TN.), John Conyers Jr. (D-MI.), and Ted Deutch (D-FL.) introduced the Fair Play Fair Pay Act of 2015—a bill that, if passed, would accomplish a handful of things. The centerpiece of the legislation is the establishment of a public performance right for AM/FM radio. This would mean that performers and labels would be able to receive compensation for terrestrial radio airplay, a right that already exists in the rest of the developed world.
Currently, only songwriters and publishers are paid when music is “performed” on AM/FM radio. Stations are not legally obligated to pay a dime to recording artists and sound copyright owners (usually the label, but sometimes the artist). FMC has long supported a public performance right for terrestrial radio, and we’re glad to see a new bill introduced that would close this egregious loophole in US copyright law.
As we mentioned above, the Fair Play Fair Pay Act has additional moving pieces. Below, we will take a look at what the bill does and explain how it would impact musicians and the industry in general. After all, one of the reasons you come here is to learn what’s actually in a piece of proposed legislation.
The Fair Pay Fair Play Act:
Establishes a public performance right for sound recordings played on AM/FM radio
The bill amends Section 106(6) of the Copyright Act to eliminate the distinctions between different kinds of radio—Internet, satellite or over-the-air—with regard to who they pay. This means that an AM/FM station would have to pay artists and labels just like newer forms of radio are obliged to do. The fix is accomplished by simply striking the word “digital” in reference to “digital audio” so that it simply reads “audio.” That is is a welcome change, and one that we 100 percent support.
Sets additional conditions for determining rates
The Fair Play Fair Pay Act would also establish a “minimum fee” to be paid by each type of service that plays music. The specific amounts are based on distinctions regarding how a service uses the music, including the “quantity and nature” of the use, as well as “the degree to which use of the service may substitute for or may promote the use of phonorecords by consumers.” Going further, the bill instructs the Copyright Royalty Board (CRB) to consider whether a use “may interfere with or may enhance the sound recording copyright owner’s other streams of revenue from the copyright owner’s sound recordings.” We certainly understand why this could be a factor in determining rates, but it could also be a way to single out webcasters like Pandora, whose “stations” are customizable to listening preference. We wonder if the language of the bill will open a can of worms about what does or doesn’t constitute “interactivity” on a service, and what impact this might have on services yet to be introduced. That said, we think it is more reasonable for the CRB judges to make a determination than to have it frozen in statute.
The bill proposes an additional standard of evaluation that may be likewise difficult to quantify. Fair Play Fair Pay calls for the CRB to to consider “relative roles of the copyright owner and the transmitting entity in the copyrighted work and the service made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, and risk.” Given that both labels and services likely see themselves as making the greatest contributions and carrying the most risk, it could further complicate how CRB judges make determinations.
Allows for a range of evidence to be considered
The bill would permit the CRB judges to consider rates and terms from comparable audio services along with voluntary license agreements (aka direct deals). There’s no additional specificity about what evidence is permissible or prohibited. But in general, this seems to be an attempt at establishing greater parity in rate-setting for different categories of service. And that’s a worthy goal.
Places all non-interactive services under the same standard
Remember the Internet Radio Fairness Act, which would have moved webcasters from a willing seller, willing buyer standard to that paid by satellite radio? This is essentially the reverse of that. Specifically—and here’s where your eyes glaze over—the bill would eliminate any connection between 801(b) and 114(f)(1)(B) for the purposes of rate-setting. This would seem to indicate that that Sirius/XM and non-interactive cable audio transmissions (like those weird stations at the high end of your cable dial that pay music but not videos) would pay under the same standard as Pandora. (Keep in mind that 801(b) would still govern the setting of the mechanical royalty rates for musical works.)
Protects small broadcasters
The Fair Play Fair Pay Act includes important protections for small broadcasters, public broadcasters, non-commercial and college radio. This means that they wouldn’t be overly burdened by the enactment of an AM/FM performance right. Small commercial stations would pay a royalty rate of $500 per year if their annual revenue amounts to less than 1,000,000. An individual, FCC-designated public broadcasting station would pay $100 per year. These limits are welcome—after all, it’s the smaller and noncommercial broadcasters who are the most adventurous in terms of playlists. We’re less excited about the complete exemption for religious services, some of which happen on stations that are quite large. We’d like to think that most faith traditions would support treating artists fairly.
Pays artists fairly, even under direct deals.
This is hugely important and something that we wholeheartedly endorse. The bill would maintain the splits and direct payment (via SoundExchange) for any direct deals between a label and a service, provided that the service is otherwise eligible for the statutory license. This breaks down to: 45 percent for the featured performer (or band); 5 percent for background musicians and vocalists; and 50 percent to the sound copyright owner (again, usually the label but sometimes the artist). The bill’s language, however, explicitly prohibits any additional revenue from going to the artist (at least as a matter of federal law). This means that, under a direct deal, artists will not benefit from a label’s equity shares in a service, money from cash advances or non-play related income that is divvied up by market share. Fairness only goes so far in 2015.
Pays older artists for performances of their works; does NOT extend other protections
Like the earlier RESPECT Act, this new bill would establish a public performance right for recordings made before 1972. Due to a weird loophole in the law, there is no federal copyright protection for sound recordings before February 15, 1972 (though some states do recognize a copyright in recordings). FMC wants ALL artists to be paid when their music is used, regardless of their age. However, Fair Play Fair Pay Act does not confer any of the other exclusive rights that an artist might enjoy from federal recognition of their works. This includes the ability to recapture their copyrights after a set term. This is why FMC continues to endorse—alongside the United States Copyright Office—the full federalization of pre-’72 sound recordings. Still, we are pleased that this “partial fix” would apply to any radio or radio-like service, meaning that it’s platform neutral: AM/FM radio pays, satellite radio pays, cable radio pays, Internet radio pays.
No impact on musical works
Publishers are currently requesting that the government allow evidence from rate-setting around sound recordings to be admissible their own proceedings. The reason is obvious: the rates are considerably higher for recordings. This bill is silent on that request, but it does prohibit sound recording rates to be used as evidence to achieve LOWER rates for musical works licensed for public performance.
Creates a mechanism to pay performance royalties to audioworkers
The new bill essentially folds in an only slightly less-new piece of legislation, the AMP Act. The important thing to know is that both bills would offer artists an easier way to designate a portion of their performance royalties to producers and engineers if there is a “Letter of Direction” from the artist. Like the AMP Act, the Fair Play Fair Pay Act would also establish a protocol for assigning 2 percent of performance royalties for recordings made before 1995 provided that a reasonable attempt was made by the studio professional to obtain a Letter of Direction from the artist.
That’s a lot to digest in one bill! There’s a lot to love about the Fair Pay Fair Play Act, and a few areas where more could be done for creators. For now, musicians should feel good that there’s forward motion on a some important matters related to their compensation. We applaud the bill’s sponsors for being willing to tackle issues that have frustrated musicians and independent labels for too long. We’ll be tracking.
Comments
10 comments postedThis is much-needed
Submitted by Anonymous (not verified) on April 14, 2015 - 6:33pm.This is much-needed corrective the devaluation of music in a distorted market. However, at the same time, the other root of music's devaluation must finally be addressed: PIRACY, in all its forms, including illicit sharing on host sites like YouTube.
Unless record labels are
Submitted by Anonymous (not verified) on April 19, 2015 - 12:48pm.Unless record labels are forced to be transparent in how the compensate artists, it's not a "FAIR" act.
The bill is quite strong on
Submitted by kevin on April 21, 2015 - 8:29am.The bill is quite strong on transparency for artists. For radio airplay, it looks like Soundexchange would be the entity that collects and distributes royalties as they do with Pandora, Sirius XM, webcasts, etc. These monies are paid directly to the artist and don't go through a record label, and can't be held against recoupable debt to the label. Going further, the bill requires money to flow through Soundexchange even in the case of direct deals between labels and services, again meaning artists get paid directly. It's not a panacea but it's a very good step.
What is the reason for
Submitted by David Herlihy (not verified) on June 3, 2015 - 9:20pm.What is the reason for applying the protocol for assigning 2 percent of performance royalties for recordings made before 1995? Is it somehow related to the DPRSRA?
Good question. You may be
Submitted by kevin on June 8, 2015 - 2:04pm.Good question. You may be correct. We'll look into it.
The bill HR 1733 is not level
Submitted by BullsEye Radio (not verified) on December 15, 2015 - 11:40am.The bill HR 1733 is not level at all ! I agree with part of it and there is part I don't agree with.
Small internet radio broadcasters for years and years have been doing the right thing. We pay our licensing fee's !! We have been paying our licensing fee's ! FM radio and all the other terrestrial industries have been finding every loophole possible to NOT pay their fee's.
So along comes Rep. Nadler and HR 1733 with this bill that finally corners the terrestrial stations, GOOD ! I'm glad that FINALLY they have no way out. BUT !
It also punishes the small internet radio broadcaster by RAISING our fee's for doing the right thing for many years !! Do you call this fair ?? As a small internet radio broadcaster, I don't find it fair at all ! In fact, it's downright offensive !
Because now terrestrial radio HAS to FINALLY pay their bills like they should have been doing for years , like small internet radio broadcasters HAD already been doing, Now they want all of the pie and want ONLY the RICH to be able to utilize the internet to broadcast. Raising the rates so high, that small broadcasters cannot afford to do what they have been doing for years.
It's wrong. It's unfair. It's a shyster way of doing things , but then again , we have come to expect only the worst from terrestrial radio haven't we ?
I am disgusted with the part of this bill that punishes the small internet radio broadcaster for doing the right thing for many years.
Why isn't terrestrial radio being sued for past royalties that they SHOULD have been paying for the last 15 years ? Why aren't they being fined for avoiding paying their bills with any possible loophole they could find ! Why are we being punished for actions of shysters ?
People in congress need to look at the whole story and hear from small broadcasters as well, not just the big players with the big mouths and loud whining !
John Michaels
Small Internet Broadcaster
Proud to have been paying
my royalties for the last
8 years without fail !
The bill retains the
Submitted by kevin on December 17, 2015 - 12:29pm.The bill retains the willing-seller/willing-buyer standard currently employed. Whether Small broadcasters continue to have their own rate tier is outside the scope of the bill.
How is this bill fair? All I
Submitted by Anonymous (not verified) on January 1, 2016 - 3:19am.How is this bill fair? All I see it as is another attempt by pseudo-intellectual politicians who have no clue about anything that goes on outside the bubble down as Washington DC. Artists complaining that they aren't being get compensated is complete garbage, look alone at how much money artists such as Taylor Swift, Maroon 5, and others bring in. These individuals make me sick and I find it sad that they want to squeeze more from the consumer and are looking to the same government we've had over the last 8 years to implement socialist tactics and essentially take over and attempt to regulate the radio. I will continue on with my Sirius XM subscription. I like it because guys like Howard Stern are able to give the FCC the proverbial middle finger. Can I take my family to a concert today, no it's too expensive, my budgets don't even allow me outside of Sirius/XM the ability to buy digital music. Yup this is political and I believe the Tea Party along with guys like Sean Hannity, Mark Levin, Rush Limbaugh, Glenn Beck, and Andrew Willow will have a field day with this and trust me when I say these representatives will be facing hell for their willingness to support big government infringement of what is essentially a first amendment freedom. Think of it this way, music is speech, everyone has a right to speak and be heard, well by forcing radio stations to compensate artists for speech isn't the government dictating what can and can't be said, this is a yes/no question, not one of it depends.
1) What you may not know is
Submitted by kevin on January 4, 2016 - 11:57am.1) What you may not know is that your preferred service, Sirius XM already pays performers when they are played, while terrestrial radio does not. It's not a "socialist intervention" that makes it possible for Sirius to pay performers while providing you with an affordable listening option. It's just the common sense absence of a loophole.
2) If you are concerned about the price of concert tickets, you might consider that concert prices have gone up as revenue from recorded music goes down. So making it possible for artists to earn when they are played on the radio would take some pressure off the live marketplace to make up the difference.
3) Music is speech and everyone has a right to speak and be heard. What you don't have is a blanket right to use someone else's speech for profit, without compensating them. Many prominent conservative think tanks agree!
So in summary: You think
Submitted by Anonymous (not verified) on May 11, 2016 - 4:17pm.So in summary:
You think nobody should get paid on a broadcasting service because Taylor Swift is rich. You hate big government pseudo-intellectuals, but you seem very ready to complain that someone should do something about high concert ticket prices. You think getting paid for people using your work is not only political, but a socialist tactic rather than a capitalist one. Also because you think something is free speech clearly means it is even when it's the sole product being used for profit by someone else who didn't make it. Do you even understand your own argument? THAT is a yes/no question.
If you believe these things then you should have your aforementioned pundits speak on whatever broadcast you run dozens of times not paying them while simultaneously bringing in any ad revenue it nets for yourself. Tell Rush and Glenn it's for the exposure. I'm sure they'll understand and thank you for the opportunity.
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