First, this is an extremely emotional topic for all the parties concerned. The stations, the performers, the labels, and the listeners all have their own views and many are heated and filled with emotion. Many voices have only taken a superficial view of the entire issue and many have their own limited perspective. I am really not a party to any of this so I'm going to try and present the picture as I see it based on facts as much as possible. I'm not a broadcaster, performer or songwriter. I no longer pay or receive royalties from music or the music industry. I'm not in broadcasting although, I was in the 1970's. I don't benefit and it won't impact me whichever way this proposed legislation goes. We keep hearing words like "fair" and "free promotion" and "its right" and ... What is fair to the broadcasters isn't what is fair to the recording industry and the artists so even the words are being used to elevate the emotions.

A word that appears from every interested party is "Fairness" and, as is to be expected, everybody's definition of what is Fair is totally different than the other players in the game. What is fair usually depends upon what perspective you are coming from. What is perceived as fair to radio is certainly not the same as what is perceived as fair to an artist or copyright holder. Therein lies the heart of the issue that we are going to look at here.

I want to present this article in a new way. I'm going to present opposing viewpoints. I will give an extremely brief overview of both the broadcast and recording business issues. This will be followed by the actual proposed act and, the final wording that, if eventually signed into law, would require terrestial AM/FM broadcasters to pay a royalty for the music they air. The Act will change Copyright Law to read. I will wrap up by hopefully clearing the air about what the act is and isn't and, what the true costs involved actually equate to in a meaningful way. This last part is the most difficult by far. I hope to have presented some truth and facts to this subject and to clear up some of the noise and FUD (Fear, Uncertainty and Doubt) and leave the reader with enough unbiased information so that they can make their own honest opinions of the matter.

The House Judiciary Committee approved the final wording of the bill last Wednesday that will, if it becomes law, for the first time, require radio broadcasters to pay performers and copyright holders when their music is played on the air. The Performance Rights Act passed by a vote of 21 to 9 within the committee.

Opposing Viewpoints

The Music Biz

One organization offering their view of Fairness is the MusidFIRST Coalition. As are all parties involved, this one is biased and is sponsored by NARM, RIAA, AFM, AFTRA, GRAMMY.com, SoundExchange and a host of others. You will notice that every entity supporting this coalition would benefit financially from their support.

The artists generate revenue from a multitude of different sources that use their music. These revenue sources include royalties from music played in bars and restaurants, in movies, at festivals and concerts, obviously CD and Digital music sales, webcasts and digital broadcasts such as satellite radio, and others. They do not derive a dime from terrestial broadcast radio stations, either AM or FM. The songwriters do but not the performing artists. As noted in our opening statement, the Osborne Brothers never receive any compensation for any radio broadcast of "Rocky Top" but, they do if its on TV, Satellite, Cable or other source.

The music artists, publishers, producers, labels and other creative elements want to bring broadcast radio into the mix. They believe that if radio is making money from, their intellectual property, that they should be properly compensated. They are for virtually every other use of their works on an international scale.

It is also no secret that another benefactor of the royalty payments, the RIAA, has been trying to get something along these lines passed for years. The RIAA is a powerful political lobbying agency and has many "friends" within the members of Congress. They appropriately note that every other media that plays and artist's music, pay for the priviledge to do so. Only the terrestial broadcaster is exempt.

Every artist who's music is broadcast on AM or FM radio and, who is not the songwriter, receives absolutely no compensation for that broadcast programming. Whether they receive any promotional value that the radio broadcast provides them has not been adequately addressed. In all of the articles I have read on the subject, rarely, if ever, has the music side even acknowledged any value whatsoever to radio's airplay of their material.

The Broadcasting Biz

Now, in the other corner of the ring, we have the broadcasters. The broadcasters bring out the costs of broadcasting, operating costs, licensing costs, payrolls, diminishing audiences, other expensive programming such as sporting events and the bleak financial picture of the broadcast industry. They bring up the promotional value of radio airplay and the fact that the artists never even acknowledge this. They talk about introducing new artists to the listensers and help break new talent into the mainstream of music today.

Broadcasters reluctantly also discussed an artist payment but have held steadfast in keeping the copyright holders, typically, the record labels, out of their pockets and their discussions. The possibility that if this act passes that the copyright holders would automatically acquire their statutary 50% of the royalties seems to be working its way into the picture. This 50% is already a part of Copyright law. The 50% to the labels would help the record labels invest in new artists, operate their business including promotion. It would also help them stay afloat. The statutory 50 percent of the new performance royalty would go directly to the copyright holders or record companies. One broadcaster asked why they should be financially responsible for the label's declining revenues? The station claimed that they, in fact, give the label free advertising and promotion for the label's artists.

An important clarification point: Three out of four of the top record companies reside outside the United States. That is true. But, in the realm of bluegrass music and many other niche genres, there are literally hundreds of independent, private, and self-produced labels that exist right here in the USA. Each of these has employees or use the services of others right here at home. While there may be some emotional value in bringing this up, it actually has little relevance to our music, bluegrass.

Just as the music biz usually fails to acknowledge any promotional value of broadcasting, nowhere in the media does the broadcast side of the argument ever state that they are, in fact, making revenue from an artist's music. The music biz seems to claim all programming, except music, pays to be on the airwaves. Sporting programs, infomercials, advertising, etc. all pay for air time. Some broadcasters even suggested artists should also pay commercial rates for airplay of their music -- something that is illegal today due to payola laws. Even during congressional hearings, Rep. King brought up the question of whether or not stations should be able to accept payments from labels if they are required to pay artists and labels for performances.

Steve Newbury of Commonwealth Broadcasting, then chairman of the radio board of NAB. Takes issue with the pro-artist argument when record labels get 50% of the royalties.

"The record labels walk away with more money from this bill than do featured artists." He blames artists' financial difficulties on unfair record contracts, cited Toni Braxton as an example. "Free radio play is the best friend of artists and record labels."

Newbury also claimed that local radio stations would be forced to cut services, switch to a talk format or file for bankruptcy if the bill becomes law. Composers would be hurt because the bill provides a financial incentive not to play music. New artists would be hurt, and music diversity would be at risk. Radio listeners would be hurt because stations may disappear, especially in rural communities. He warned of "Significant unintended consequences."

The broadcasters, who have long opposed a performance royalty, have also started to fight back with their own The Local Radio Freedom Act (H. Con. Res. 49). The Local Radio Freedom act says in part, "Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings."

The Congressional Hearings

First of all, the entire official transcript of the Judiciary Committee hearings is available on Cybergrass as a 3.5 MByte PDF file. This document is from the Judiciary Committee and not a third party. Howard L.Berman (Chairman of the Subcommittee) opened and chaired the hearing which included testimony from Nancy Sinatra, Steven Newberry CEO, Commonwealth Broadcasting Corporation, Charles Warfield, President and COO, ICBC Broadcast Holdings, Incorporated, and Thomas F. Lee, President, American Federation of Musicians.

Of the three interested parties, Artists, Labels and Broadcasters, it was interesting that the RIAA was not represented or present at the hearings. The RIAA has been a long time proponent of acquiring more royalties so it was surprising that they were not accounted for. Charles Warfield, President and COO of ICBC Broadcast Holdings noted the absence saying, "It is said all the time the music business is a product of a true symbiotic relationship. Unfortunately, today you have before you only two of the three groups that make up that relationship. The witnesses' table is missing the third arm of the music industry trio. Recording Industry Association of America, or RIAA, which represents the big four record labels." In addition, the hundreds of indie, private and self produced labels are also being ignored.

The Pro Views

Howard L.Berman opened the hearing saying:

I would like to begin by welcoming everyone to this hearing on H.R. 4789, the "Performance Rights Act." As I said last July, I have supported the expansion of the performance rights and sound recording for over 20 years with two caveats. First is that by extending this right, it should not diminish the rights and revenues of the creators of musical works. Secondly, terrestrial broadcasters large and small must remain a viable source of music.

The bill we introduced in December does just that. The bill is designed to fix a glaring inequity. Currently Section 114 provides a compulsory license to publicly perform a sound recording where there is a digital audio transmission. However, terrestrial broadcasters or over-the-air radio broadcasters as they are sometimes referred to are not required to pay a royalty for their transmissions. They enjoy an exemption from the performance right.

I have long been convinced that fairness mandates that all those in the creative chain of the artists, musicians and others who bring the recording to life should get compensated for the way they enrich our lives. The U.S. is one of the only developed countries in the world that doesn't one of the few developed countries in the world the debate of whether or not China is now a developed country that doesn't require over-the-air radio stations to compensate those artists and musicians producing the music that broadcasters use to attract the audience that generates ad revenues.

In large part because of music radio is able to profit. Not compensating those performers of the music is unfair and ultimately harmful to music creation that benefits everyone, including the broadcasters.

Furthermore, the law currently requires all other platforms in the U.S. such as satellite and Internet radio to compensate the copyright owner. Let me begin by clarifying how we have narrowly tailored this legislation.

Berman notes:

1. First, the bill repeals the current broadcaster exemption, but it does not apply to bars and restaurants and other venues.
   
2. Secondly, the bill provides an accommodation for small and non-commercial broadcasting by setting a low, flat annual fee to allay any expenses relating to negotiation, litigation or arbitration. Nearly 77 percent of the existing broadcasting stations in this country, including college stations and public broadcast, will pay only a nominal flat fee rather than having to pay a percentage of their revenues as royalties.
   
3. Third, the bill extends certain performance rights to artists, musicians and their record labels. It does not harm or adversely affect the revenues rightfully paid to the songwriters and other existing copyright owners. Although I also understand there are additional protections the songwriters are seeking, which we will consider.

Berman noted at the opening of the Judicial Committee Hearings in regards to promotional value, "Assuming there is a promotional value in the broadcast of music, there is nothing in the bill which would prevent a copyright royalty judge from factoring in the value of this promotion in determining the rates the radio station would have to pay. The argument about promotion should not be about whether to pay, but how much to pay." He continued saying, "As to the tax argument, my notion is while calling the performance right a tax might make for good rhetoric, it is even more accurate to call the exemption enjoyed by the broadcasters corporate welfare or even, God forbid, government confiscation of property. Since the U.S. code compels performers to give broadcasters their music for free, the bill merely eliminates an unjustified subsidy to broadcasters and requires them to compensate those whose work they use and profit from."

Ranking Member of the Judiciary Committee, Lamar Smith made this early comment as well:

I understand the witnesses for the broadcasters today will present new evidence that they believe demonstrates a direct positive correlation between local radio airplay of songs and increased revenue to artists and record labels. The reality is copyright law does make distinctions among classes of owners and types of technologies with respect to both the entitlement to receive and the obligation to pay performance royalties.

Whether or not these distinctions are sensible and justified as sound copyright policy will be the focus of discussion today and I expect for some time to come. But neither this Subcommittee nor the Congress operates in a world of academic theory. The decisions we make impact the lives of real individuals and industries, and the effects can be immediate and lasting.

Smith later commented saying:

it appears that the primary justification for changing the law seems to be to achieve parity among platforms, copyright owners and our international trading partners. Without regard to the specifics of each one of the parity arguments, it is likely that this measure would actually create a number of new disparities that may or may not be entirely justified by present or future circumstances.

The opening statements were very pro-performance rights royalties being paid by broadcasters. The speakers even said so openly as part of their opening statements. But, another side was to be heard as well.

US Rep Zoe Lofgren of Caifornia stated in the hearing

The recording industry feels that it is adversely impacted by the absence of performance royalties from the terrestrial broadcasters. The broadcast industry argues that royalty payments will devastate local radio. But the industry that is in real trouble today is Internet radio. Many Webcasters are facing royalty payments that are in excess of their entire revenues. And the Arbitron data now shows that Internet radio listenership is falling.

I mean, if we take a look at the cable/satellite fees, it is about well, the revenues, total revenues are about $2 billion in those sectors. Six to 15 percent of it is being paid out in royalties. The Internet radio companies generated about $150 million in revenue. And they paid at least 50 percent of that revenue in royalties. And some paid 100 percent 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 are going to take a look at disparity across platforms and it is 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 are not going to have a discussion because it is not going to exist any more. And I think that would be a tragic outcome because if you want to look at how new artists newly break in without being too beholden to labels, it is on Internet radio.

US Representative Mike Pence from Indiana commented saying,

Because I struggle with the Performance Rights Act as currently crafted. Although I know there has been a sincere effort to carve out exceptions and the like, religious broadcasters and local broadcasters. But my question is oftentimes as performers if, you know, you could pay radio stations to air your records, would you? And that is usually the one where the most respected representatives in this industry will look at me blankly and not answer me.

I mean, and if they, in fact, would be willing to pay, isn't that kind of prima facie evidence that there is value in the airtime?

The Con Views

Representing broadcasters, Steve Newberry, President and CEO of Commonwealth Broadcasting, which operates 23 stations located in Kentucky made these comments:

I can tell you that all broadcasters, urban, rural, religious, public, community, ethnic, large and small broadcasters like me have concerns and oppose H.R. 4789. Local radio provides to the recording industry what no other music platform can, pure music promotion. Radio is free. It is pervasive, and no one is harming record label sales by stealing music from over the air radio.

Don't take my word for it. Just look at the recent studies that confirm local radio's promotional value. First, NAB compiled a report using data from the Nielsen Company and from Pollstar that showed the extraordinary promotional value that local radio provides to artists and record labels. These slides unequivocally show that there is a direct correlation between the number of spins or plays on the local radio and the sales of albums and singles.

This direct and positive impact on record sales is consistent across diverse genres and is seen regardless of the audience. As you can see on the screen and also on the sheet in front of me, Taylor Swift, who is the new country artist, has an increase in preradio airplay. You also see a corresponding spike in record sales. The sales mirror the spins. And it happens over and over with each song.

Now, that correlation can also be seen with an artist who may initially break on the Internet like Colbie Caillat. On her slide you can see the early but modest bump in sales that resulted from Internet play of her song Bubbly. But once she got exposure on local radio, her sales hit the roof.

So clearly, there is a strong and predictive relationship between radio airplay and sales. But can we quantify it in dollars and cents? Yes, we can.

In a paper just released, economist and Ph.D., Dr. James Dertouzos completed an economic analysis that measures the promotional value of free radio airplay to record sales. And according to this analysis, Dertouzos found that the significant portion of record industry sales of albums and digital tracks can be attributed to local radio airplay at a minimum 14 percent and as high as 23 percent. That translates to between $1.5 billion and $2.4 billion of promotion annually.

Now, those numbers only include the promotional value to record sales. It would go even higher if it included the promotional value of concerts, tickets or merchandise sales. And this is the promotion that artists and labels are getting for free.

He addressed this again in his closing where he said,

Local radio is a purely promotional vehicle for artists. Radio airplay drives record sales. The system in place today has produced the best broadcasting, music and sound recording industries in the world. It is not broken. And it is not in need of fixing.

Newberry also mentioned an area that has concerned me regarding foreign stations noting,

On the international front it is simplistic to argue that because other countries pay a performance royalty the United States should as well. First, comparing the United States to totalitarian countries like Iran or North Korea is just plain silly when you consider the artistic freedom of expression that we have here in the United States of America. But it is also comparing apples to oranges.

Most of these other countries created performance royalties when the broadcast systems were either government owned and operated or at least substantially subsidized by tax dollars. Often it was the government who was paying the royalty.

The U.S. broadcasting system, however, is predominately privately owned and operated and does not receive any tax subsidies. Clearly, the lack of a performance right has not affected the quality or quantity of music in the United States. At the end of the day, the U.S. recording industry is the most prolific in the world and is more successful than the United Kingdom, France, Germany, Canada, Australia, Italy, Spain and Mexico combined, all of which have a performance fee.

Then, Newberry addressed Satellite and Internet radio

Levying a new performance fee on local radio will not and cannot establish true parity. Yes, satellite and Internet radio do indeed pay performance fees. But satellite and Internet generally rely on subscription fees and offer interactivity so listeners aren't encouraged to buy the music.

As for small stations, Newberry added

Congressman, it is problematic from the standpoint that a lot of small market stations and granted in Washington I am sure $5,000 is a small amount of money. But for a small market operator of an AM station or a small FM station that may very well be dealing less than $100,000 a year with a profit margin of 10 percent or less and profit margin in most of these cases defines what the owners take home for their work. This is not after they have been paid. It is their take home pay.

So $5,000 is a significant amount. And if you take a small broadcast operation that has an AM/FM combination in a small community like Princeton, Kentucky or somewhere in rural North Carolina, now you have $10,000 of obligations to pay. So I understand the intent with that.

As a small market broadcaster I appreciate the intent. But I think the amount is something that would be an economic burden on those who find it most difficult to find profitability in our industry.

Another opposition voice was that of Charles Warfield, President and COO of ICBC Broadcast Holdings that serves primarily the African-American communities in New York City; San Francisco; Columbia, South Carolina; and Jackson, Mississippi. Warfield was quite outspoken on the aspect of fairness saying,

First, is it fair that the record labels will take a full 50 percent of any new performer's royalty under H.R. 4789? Unfortunately, RIAA is not here to explain why it needs half of a new performer's fee that is designed for artist compensation.

Second, H.R. 4789 is unfair in that it targets local radio stations when the real culprits for the lack of artist compensation is the result of inequitable, one-sided contracts that artists find themselves entangled in for years after they have signed with a label. I have heard these awful stories about artists who were forced to tour in their later years. But the reason these older artists are slogging from city to city instead of spending time with their families is not local radio. It is their record label.

Third, H.R. 4789 equates artists being paid fairly as being paid the same as composers. Yes, composers and their publishers who were typically a division of the big four record labels receive a royalty from local radio airplay. And this makes sense because unlike performers the composers do not have the ability to capitalize on their celebrity as do performers.

Finally, in addition to targeting the wrong industry to solve the artist compensation problem, H.R. 4789 is unfair in that it claims to achieve parity between music platforms when no true parity can exist. Being a local radio broadcaster carries with it large regulatory responsibilities which the other platforms do not have. True parity would mean Internet and satellite radio abide by decency regulations, public interest obligations, payola rules and emergency alert requirements.

But the fact of the matter is that local radio is different. We are local. We are free. We are purely promotional. And true parity cannot exist.

Newberry, later in the dialog correctly noted

There is a lot more that goes into the success of a concert than radio promotion, and I will tell you there is a lot more that goes into the success of a radio station than the music.

The Other Arguments

It was interesting that some topics came up that are either indirectly related or unrelated to the legislation on the table. One was the amount the musicians and background singers (not the primary artist) receive being questioned and the other being related to bars and restaurants. Here is that part of the hearings.

Thomas F. Lee, President of the American Federation of Musicians was asked about the proposed legislation only allocating 5% of the royalties to musicians and background singers. He noted the labels would receive 50%, the artist 45% and the other 5% for the musicians and singers. He was asked about the small amount and Lee enlightened the hearing noting that "When you have been on 18,000 recordings, and your recordings are for multiple artists, that adds up rather quickly."

Lee was also asked, "The copyright registrar has testified that restaurants, bars and retail stores should also be paying a performance fee. Do you agree?" After noting that this was not a part of the act they were discussing, he did say that he would support such an amendment, should it be added.

The Commerce Department sent out letters saying that the Broadcast Industry would be better off if they paid the royalties yet none of the broadcasters were questioned about it and, in fact, had not seen the letter. Why and how this occurred, was never mentioned but it raises a question of "Why did the Commerce Department do this?"

The Middle (My view from the outside looking in)

These two positions further highlight that radio and artists are, in fact, not engaged in a mutually beneficial relationship. There is no doubt that the hundreds of millions of dollars in new royalty payments would bolster artists and labels and at the same time put a dent into broadcasting revenues. How big that dent would be would be based on how much music gets played. Most of the major broadcast stations in America play a lot of music throughout every broadcast day.

Second, there is a lot of "noise" and FUD (Fear, Uncertainty, and Doubt) surrounding this bill. There is bias, unrelated bias and apples-oranges comparisons that really don't mean anything. The NAB calling it a "Tax" which, it is not and, the the Recording Industry Association of America (RIAA) and the American Federation of Television and Radio Artists (AFTRA) comparing apples and oranges by using foreign markets, and even the Michigan Broadcasters Association trying to make this into a racial issue.

Third, there are serious business issues on both sides that need to be addressed. Quite simply, does airplay really increase sales? Does being in the Top-10 on a Billboard chart correlate to a top ten sales position? What is the "real value" of airplay as a revenue figure to both artists and the stations. Are both entities being evaluated fairly and evenly by the Congress? What is a fair royalty in light of the entire business model of the entire music industry? There are lots of questions and no real answers have come forth. Everything every side puts forth is extremely biased and filled with the emotion mentioned earlier.

There is a lot of money involved or at stake for all the players too. We are talking numbers in the hundreds of million dollars to billions of dollars. That is a substantial win or loss to anybody. Kane, the host of The Kane Show on Hot 99.5 FM in Washington said that radio provides $2.4 Billion in music promotion to the music industry and that radio does this for free. Radio gives away concert tickets, albums and more to help promote the music. $2.4 Billions is a huge number. But, where does this number come from? How is it quantified? How was it validated? Like so much today, the noise is putting out a lot of statistics and statements without the background information. Thus, those numbers are actually quite meaningless. The money is real and we're talking serious dollars. Even the Wall Street Journal has been paying attention to what's going on. Money talks and it speaks loudly.

An example of just how meaningless the ratings and the numbers game really is was recently illustrated when the top Billboard Magazine chart album was an unheard of album by an unheard of artist and from an album that didn't even sell 100,000 copies! According to Business Insider, The top spot on this week's Billboard album chart belongs to Chrisette Michele. Never heard of her? Neither have many other people because Michele has scored the lowest first-week sales total in Nielsen SoundScan's 18-year history (emphasis added).

It is also no secret that record companies are fighting for their lives. Illegal downloads from various sources in some of bluegrass, roots and Americana music have been nearly 16 to 1 compared to legal sales. So, if a Grammy winning album sells 77,000 copies, that corresponds to 1,200,000 illegal downloads of the same work. This corresponds to almost 16:1 illegal copies of an album for every legitimate sale. Those downloads didn't generate a dime of income for anybody - artists, songwriters, producers, labels, ... Nobody!

And what about broadcast radio? iPods, Sirius-XM satellite, CD players, etc. are taking over. In this economy, advertising dollars are scarce and audiences are shrinking. Who listens to the radio anymore? Maybe in your car or when your morning alarm clock radio goes on but today's society doesn't listen to the radio much. Nobody really seriously listens to music anymore. Portability is the game today -- nobody has a "listening room" where they absorb quality music today. Who do you know that sits in front of their super-duper home stereo system and listens to The SteelDrivers or Blue Highway today? It doesn't happen. Today's audiences want convenience and portability.

Then, another facet of the entire music broadcast industry is the syndicated programming. Clear Channel pumps out the same stuff coast to coast. There is no localization of music anymore. Sirius-XM going to put into the group as they are also a national and not local broadcast. You can pretty much say that local radio is ancient history today. Except for some small low-power rural and college stations, individual local radio has gone the way of the Burma Shave signs. Even in our little bluegrass niche genre, we have Into the Blue, Knee Deep in Bluegrass and other syndicated programming being aired coast to coast. Some stations are even 100% automated and just play whatever comes down the satellite pipe. Personality Jocks and Disk Jockies are as outmoded today as the LP records that they used to play.

So what we have today is that every music business entity wants a ever larger piece of an ever shrinking pie. Everybody wants to make more money when there is actually less to go around. The artists most certainly want to get paid. Radio stations want to make money. Songwriters still expect their fair share. Record labels want to survive. Producers, sidemen, engineers and others all want to be able to support their families too. This is not a simple picture, issue or topic. It is actually far from that.

It is important to note how the proposed payout will take place. It would be the same percentages as for other performance royalties as stated in Title 17:

§ 114. Scope of exclusive rights in sound recordings

(g) Proceeds from Licensing of Transmissions. --

2) An agent designated to distribute receipts from the licensing of transmissions in accordance with subsection (f) shall distribute such receipts as follows:

(A) 50 percent of the receipts shall be paid to the copyright owner of the exclusive right under section 106(6) of this title to publicly perform a sound recording by means of a digital audio transmission.

(B) 2 ½ percent of the receipts shall be deposited in an escrow account managed by an independent administrator jointly appointed by copyright owners of sound recordings and the American Federation of Musicians (or any successor entity) to be distributed to nonfeatured musicians (whether or not members of the American Federation of Musicians) who have performed on sound recordings.

(C) 2 ½ percent of the receipts shall be deposited in an escrow account managed by an independent administrator jointly appointed by copyright owners of sound recordings and the American Federation of Television and Radio Artists (or any successor entity) to be distributed to nonfeatured vocalists (whether or not members of the American Federation of Television and Radio Artists) who have performed on sound recordings.

(D) 45 percent of the receipts shall be paid, on a per sound recording basis, to the recording artist or artists featured on such sound recording (or the persons conveying rights in the artists' performance in the sound recordings).

So based on the existing statute, the copyright owner (usually the label) gets 50%. The artist(s) get 45% and the musicians and background singers each split the remaining 5% for 2 ½ each.

Those for the bill state that satellite and Internet radio broadcasters pay copyright royalties to the owners of sound recordings yet fail to even address the fact that these two entities didn't have a voice during the hearing process and, in fact, were explicitly shut out by the direction of the RIAA. If we want fairness, there should also be fairness in reporting of the facts -- even by the Judiciary Committee and its witnesses.

So, wading through the mud, we find both sides are throwing out misleading information and "FUD". While this may make them feel good, it does not serve the public and it most certainly does not serve the members of each respective side of the business. I found out long ago that if you want the truth, you need to read the source. That source will be the Title 17 United States Code as it would read if the bill gets signed into law.

Continue on to Part II

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