Round two: Radio royalties ruckus resumes in the US House

In an extremely familiar-looking gathering of legislators, performers, and radio broadcasters last Wednesday, Congress once again debated how musicians and performing artists could be compensated by radio without breaking the industry.

Very few rounds of House subcommittee hearings are ever so entertaining that members actually consider the notion -- some not so much in jest at all -- of making it an annual event. Last year, the Subcommittee on the Courts, the Internet, and Intellectual Property took up a "debate" on the subject of whether the exemption on performers' royalties for terrestrial radio should be lifted, featuring a bench full of proponents of the lift, four more proponents on the panel, and one lone opponent left to represent the radio industry.

Whatever your stance on the matter may be, there was no doubt it was an unfair fight. But rather than draw the legislative matter to a close, Congress stalled long enough to stage a rematch last Wednesday, with some of the very same players making a repeat performance. There was Charles Warfield, the President and COO of ICBC Broadcast Holdings, one of the largest holding companies for minority-owned radio broadcasters in America, prepared once again to get barraged from all sides.

Taking over the role of stage star from Judy Collins -- whose performance last year on behalf of artists surprisingly reminded many more of Joan Collins -- was Nancy Sinatra, a star so bright against the backdrop of stodgy old portraits of past Subcommittee members that the proceedings were delayed for at least one hour, twenty minutes, while members took turns posing with her. And yes, it did appear she was wearing boots.

Of course, the real star of the show was legislation that would lift terrestrial radio's performance royalties exemption -- essentially the very same legislation that was discussed on this stage last year. This time, the number is HR 4789. While there's not much active opposition to the bill on this subcommittee, there is a growing movement elsewhere in the House in favor of a resolution certifying the current royalties exemption, proclaiming that radio performs a vital promotional service which serves as compensation enough for performers. (US radio broadcasters do pay copyright royalties annually.)

Setting the backdrop, just as before, were the stern warnings about no less than the wrath of deities casting disfavor upon those who would spite the poor performer. "You know, you get a lot of wisdom in kindergarten from fairy tales. And we learn before kindergarten that terrible things happen to a society that refuses to pay the piper," pronounced Rep. Brad Sherman (D - Calif.). "As Americans, we believe in the rule of law, we believe in the protection of private property. We have one highly anomalous exception, and that is the rights of performers of recorded music.

"We see that satellite and cable broadcasters have to pay, giving them an unfair disadvantage, perhaps, when they compete with broadcasters," Rep. Sherman continued. "And at the same time, no one has argued recently that the satellite and cable broadcasters should not have to pay the performance artists; yet they do as much for promotion as do the broadcasters."

Sherman went on to scold royalties opponents, who are currently led by the National Association of Broadcasters, an organization that over the last few years has characterized the application of royalties to radio as a "performance tax."

"We hear the use of the word 'tax,' which is an ugly misuse of the English language. A tax produces revenue for governments. This bill will not," he stated.

Just like last year, there was Rep. Zoe Lofgren (D - Calif.) to warn about the dangerous precedent that could be set if certain elements of any new terrestrial radio royalties formula were to apply to Internet broadcasters. On the other hand, she made a clear case for compromise.

"If we take a look at the cable/satellite fees, the total [annual] revenues are about $2 billion...six to fifteen percent of it is being paid out in royalties," Rep. Lofgren reported. "The Internet radio companies generated about $150 million in revenue, and they paid at least 50% of that revenue in royalties, and some paid 100% of their revenue in royalties. Meanwhile, the broadcast industry generated $15.5 billion, and they paid nothing. So it seems to me that, if we're going to take a look at the disparity across platforms -- and it's fair and appropriate to do so -- it would be a real mistake not to use the opportunity to also take a look at Internet radio. And I think if we wait too much longer, we're not going to have a discussion, because it's not going to exist anymore, and I think that would be a tragic outcome. If you want to look at how new artists can really break in without being too beholden to [record] labels, it's on Internet radio. That's really the freedom and the opportunity."

Next: These boots were made for talkin'...