Charles Warfield Explains 'Free Airplay For Free Promotion' To The House Judiciary Committee Today
Ed Christian: Performance Royalty 'Misguided'; Michael Huppe Calls Radio Exemption A 'Glaring Inequity'
June 25, 2014 at 3:53 AM (PT)
It was almost two weeks ago (NET NEWS 6/10), that "Music Licensing Under Title 17 Part One," the first of two House Judiciary Committee hearings on music licensing, got under way in WASHINGTON D.C. at the RAYBURN House Office Building.
TODAY (6/25), broadcast radio is front and center, with NAB Joint Board Chair CHARLES WARFIELD and SAGA CEO ED CHRISTIAN, who is also Chairman of the RADIO MUSIC LICENSE COMMITTEE, among the scheduled people to testify.
WARFIELD is set to tell the committee that he is, "uniquely situated to testify on the issues before this Committee today for two reasons. First, NAB is an Association comprising both creators and users of copyrighted works, so it has a distinct interest in advancing the cause of both sides in this debate. Second, I was personally involved on the recording industry side of the business, so I recognize the opportunity and challenges that industry faces as well.
"As you undertake your review of the music licensing laws, it is worth highlighting at the outset that the Supreme Court has repeatedly held that the core objective of copyright law is the public good. Not the creator’s interest. Not the user’s interest. But the interest of the public at large. While stakeholders on each side have manipulated the text of the Constitution and subsequent case law in attempts to justify their own arguments and agendas; Congress and the Court have always strived for a copyright regime that balances the rights of creators and users to maximize this public good. The aim of this Subcommittee’s Copyright Review should be no different.
"Unfortunately, two weeks ago, when this Subcommittee held its first of two hearings on music licensing, groups representing artists, music publishers and songwriters seemingly ignored this incontrovertible objective. Instead, each industry made its case for fixes to copyright law that served a very different goal -- ensuring that their individual constituencies receive greater compensation for their work at the expense of music licensees and listeners. Nowhere in their arguments did they emphasize the need for 'balance,' the interest of 'consumers,' or the impact on 'competition' -- any of which would promote the public good. Today, I am going to take a different approach, and will briefly explain why I believe that broadcast radio, and the current legal framework that enables it, unquestionably promotes the public good. While unfortunately, the laws governing webcasters fail this test.
"First, the current law has enabled a locally-focused, community-based broadcast industry that is completely free to listeners. This free service is unique among entertainment media, and doesn’t require a subscription, a broadband connection, or an expensive wireless data connection for access. Instead, it is completely free to anyone with an AM/FM antenna. Combined with an architecture that ensures that broadcast radio is always on in times of emergency, even when other forms of communication fail, broadcast radio has played a critical role in communities across America for decades. But make no mistake, maintaining this completely free model in an increasingly competitive and costly industry is a delicate balance. Like all other businesses, local radio stations represent brands created and maintained at great expense -- from on-air talent and content-production costs to staffing and equipment. Radio broadcasters’ ability to continue offering their product under a completely free model is directly premised on the existing legal framework and resulting cost-structure.
"Second, the resulting popularity of broadcast radio -- due to its cost (it’s free!), community-focus, and of course the product, which often includes music – has contributed to a U.S. recording industry that dwarfs the rest of the world both in terms of size and scope. This output of diverse and high quality musical works and sound recordings unquestionably benefits the public and flows from the current legal regime. The existing U.S. system of 'free airplay for free promotion' has served both the broadcasting and recording industries well for decades. The U.S. is the most significant exporter of music and the largest creator for recorded music sales world-wide. Further, the mutually beneficial relationship between broadcasters and the music industry, enabled by the existing law, has incentivized a U.S. recording industry is larger than that of the U.K, Germany, France and Italy combined, all of which impose performance royalties on over-the-air sound recordings."
CHRISTIAN will explain, "the longstanding mission of the RMLC has been and continues to be to provide a competitive market for music licensing in which local radio stations pay a fair price for performance rights and copyright owners receive equitable compensation associated with these rights payments. The RMLC has historically achieved fair and reasonable licenses for the radio industry with ASCAP and BMI through a combination of industry-wide negotiations and, as necessary, federal 'rate court' litigation.
"The digital era has resulted in a sea change for the music industry generally, and the music licensing process in particular. When taking stock of where we are, today does not look like yesterday and tomorrow will not look like today. Regarding reforms, stakeholders in this process should seize the opportunity to develop a music licensing process that allows creators a fair chance to reap their just reward by, first, insuring that existing license fees paid by music users are not disproportionately diminished in their journey from licensee to the copyright owner. Before we simply attribute the perceived economic injustices ascribed to creators of musical works to the level of fees paid by music users, we need to carefully scrutinize the royalty distribution process that dictates how and what creators are paid relative to incoming license fees. Until we are satisfied that the current royalty distribution process works efficiently and fairly for creators, the conversation should not turn at all to level of payments made by music users generally, and the radio industry in particular.
"Any licensing redistribution concepts that rely upon the radio industry for funding are misguided. With particular reference to the recurring demand by the recording industry for a sound recording performance right to be imposed upon terrestrial radio, please understand that the radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital strategy that addresses a decline in its own brick and mortar income."
Michael Huppe Calls Radio Exemption A 'Glaring Inequity'
SOUNDEXCHANGE Pres./CEO MICHAEL HUPPE was perhaps the most agressive in disagreeing with broadcast radio's position. He said, "The loophole that allows terrestrial radio (i.e., over-the-air broadcast channels on AM/FM/HD) to use copyrighted sound recordings without paying continues to be the most glaring inequity in music today," and continued, "ending the terrestrial exemption is critical to leveling the playing field for digital services as well. Right now, digital radio sits alongside terrestrial radio in cars, boats, and homes -- yet those modern innovators pay for the music recordings they use while AM/FM broadcasters pay nothing even when their broadcasts are played through the same speakers to the same audience. The government should not be picking winners and losers in this way or propping up particular technologies or business models. It is sometimes argued that the broadcaster exemption is justified because radio airplay promotes record sales. However, that does not describe most radio use of music today -- if it ever did. Indeed, classic artists like THE BEACH BOYS, THE TEMPTATIONS, LED ZEPPELIN and BILLY JOEL do not need radio to promote them, yet radio stations play their music all the time."
Summing up, HUPPE reiterated, "For Congress, I believe success is a world in which the government does not pick winners and losers, and in which all creators are entitled by the law to receive a fair market value for their contributions. Most urgently and immediately, that means ensuring that legacy artists are protected when their music is played on digital radio, eliminating the unfair and distorting loophole that requires artists to subsidize AM/FM/HD radio, and ensuring that all radio platforms are subject to a fair market value for all creators’ contributions.
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