[This post was authored by FMC Policy Intern Joseph Silver & Policy Fellow Daniel Lieberman]
Yesterday on Capitol Hill, the House Subcommittee on Communications and Technology rounded up some music industry bigwigs including Cary Sherman (CEO of the Recording Industry Association of America); Jeff Smulyan (CEO of Ennis Communications); Steven Newberry (CEO of Commonwealth Broadcasting Corp.); Tim Westergren (Pandora founder); Christopher Gutttman-McCabe (Vice President of CTIA Wireless); Gary Shapiro (President and CEO of the Consumer Electronics Association); and a single artist: Ben Allison, a New York-based jazz bassist. The panel, the title of which the recently deceased Ray Bradbury might even admire — “The Future of Audio” — featured a broad discussion that touched upon music, mobile technology, radio signals, and last, but hopefully not least, artist compensation.
The panel was often free-wheeling in its discussion on how best to establish a level playing field in radio. However, three specific issues cut through the Congressional haze: (1) whether FM chips should be mandated on all U.S. wireless hardware devices; (2) the statutory licensing rate for digital streaming audio services / whether a compulsory performance license should be considered for broadcast radio stations; and (3) how the new rules allowing “Low Power FM” (community-based, non-commercial) stations operating at 100 watts or less should be implemented.
The panelists debated how artists get paid — if at all — for the public performance of their sound recordings, specifically, in the realms of broadcast, satellite, and digital radio. Under current copyright law, satellite and internet-radio companies like Sirius/XM and Pandora are required to pay artists for the music transmitted on their platforms. However, over-the-air radio stations (often called “terrestrial radio”) only pay songwriters through publishing royalties, but are exempt from paying artists for each play.
We here at FMC steadfastly support compensating artists whether their muisc is delivered via satellite, the internet, or a good old fashioned transistor radio. Pandora co-founder Tim Westergren agreed that terrestrial radio stations should also be required to pay artists a per-play statutory royalty. In his testimony, Westergren noted that “Last year, on revenues of $274 million, Pandora paid $137 million to artists and labels. That same year… broadcast radio, on revenues of roughly $15 billion, paid zero.”
The panel also tackled whether to require mobile device makers to install and activate FM-enabling radio chips. Broadcast radio advocate Jeff Smulyan argued that FM radio chips should be installed on all mobile phones in the US to preserve free, over the air radio, and also for national security reasons. He explained that FM tuners in handheld devices will allow individuals to access potentially life-saving information in cases of emergency when cellular networks can become clogged and unreliable.
In response, consumer electronics head Gary Shapiro claimed people increasingly rely on the internet during emergencies, and that wireless carriers are already taking precautions through implementation of new systems that transmit geographically targeted emergency alerts. We expect this debate to continue, particularly if FM chips in mobile devices are considered a requirement to get the broadcasters to agree to a sector-wide performance right for terrestrial radio.
We’re glad Congress is taking a look at these issues. Still, the way the hearing was structured left much to be desired. Selected by the Recording Academy to represent artists, Ben Allison, a bassist and creator of the Jazz Composers Collective, held his own, detailing how artists make money in today’s broadcast radio world, saying, “I have two jobs, but I only get paid for one” (i.e. he gets paid as a songwriter but not as a performer). But on a panel that included seven business executives, it seemed that the inclusion of Allison as the lone artist voice was almost an afterthought — disappointing for a discussion focused on “The Future of Audio.” Also absent from the debate was any public interest perspective.
While the issues raised at this hearing are undoubtedly important, if Congress wants to meaningfully address how to build a musician’s middle class, we’d suggest broadening the conversation to include:
- Musicians’ access to healthcare — Last year, the House voted to repeal health care reform without consideration of how independent contractors might acquire coverage.
- Federal funding for public broadcasting — The house also voted to slash federal funding to the Corporation for Public Broadcasting (CPB), a key funding source for National Public Radio (NPR) and an important supporter of musicians.
- Investment in internet and telecommunications infrastructure.
- Well-tailored means to combat online piracy while ensuring free speech protections.
- Preserving a fair and competitive landscape for digital licensing.
Thoughts? Comments? Tell us below.