For more than a century, local radio stations and musicians have enjoyed a mutually beneficial relationship. Artists provide great songs, while local stations play the songs and promote them to a huge listening audience (roughly 90% of Americans each week). Radio stations have helped turn emerging artists into superstars, sustained the careers of legacy musicians, driven album and merchandise sales, promoted concerts and streams, and provided the largest platform for artists to showcase their talents.
Artists continually express their appreciation when they hear their songs played on local radio, thanking stations for playing their music when they accept awards or talk about how they broke into the business. They visit local stations while touring to promote their concerts and build relationships with radio personalities in the hopes of generating airplay. This is a model that works.
But in recent years, the record labels have sought to disrupt this relationship as their business models have changed, even as their profits soar. At their behest, Reps. Ted Deutch (D-FL) and Darrell Issa (R-CA) introduced the American Music Fairness Act (AMFA), which would impose a new performance fee on local radio stations for playing artists’ songs. This misguided effort would upend the long-standing relationship between local radio and artists and threaten the viability of hometown radio stations and the communities they serve.
Let’s break down the facts and expose the truth behind “Music Fairness.”
Three record label conglomerates are pocketing billions.
Labels argue that the AMFA would principally target the largest broadcast radio groups while providing more modest terms for smaller stations, which they want people to believe are the only ones that serve local communities. This notion is an affront to large and small broadcasters alike.
As AMFA supporters point out, the six largest broadcasters own just over 2,000 radio stations nationwide. Yet, with 15,441 licensed full-power stations in the U.S., that represents just over 13% of the industry. In contrast, the three largest record labels are the foreign-owned Sony Music, Universal Music Group and Warner Music Group, which account for 70% of all recorded music revenue and have a combined market cap of almost $170 billion.
By arguing that the AMFA only targets big station groups, the record industry also says to broadcasters, especially minority broadcasters, “You can be little, but you can never be big.” It is insulting to infer that smaller broadcasters should be happy with paying minimal performance royalties because they will never be big enough to face more onerous terms. In fact, there are no exemptions in this bill. If the AMFA succeeds, everyone pays fees that will only increase.
Local radio serves communities in ways streaming services never will.
Radio stations – whether they are in big cities or small towns, part of a larger group or individually owned – are dedicated to local service. That includes providing local news, weather, traffic and emergency information; their sponsorship of local concerts and festivals; their support for food, clothing and blood drives; their relationships with local businesses and promotion of charities that help neighbors in need. Local is radio’s calling card.
AMFA supporters argue they want broadcast radio to be treated the same as other audio platforms. But the fact is, broadcast radio IS different than streaming services and satellite radio. Local radio stations face heavy government regulation – including on ownership, advertising, filing requirements and license obligations – while digital services are largely unregulated. Local stations are also free to the public, while many streaming services and satellite radio charge listeners a subscription or premium fee.
Radio pays royalties.
Even though broadcast service is free, local stations do not get a free ride when they play music – they pay hundreds of millions of dollars each year to songwriters and composers who create musical works, as well as tens of millions of dollars annually to record labels and performers to stream broadcasts. But it appears this system has been abused by the music industry.
Recently, a group of songwriters wrote an open letter to the music industry alleging that some artists have been assuming songwriting credit without having made contributions to the composition of the work. They allege these unwarranted songwriting credits have taken money away from songwriters, who do not receive the same benefits from promotional radio airplay as performing artists. While we have no knowledge of the validity of these claims, it is worth noting that 96 of the 100 songs on Billboard’s 2020 Hot 100 have the main performer credited as one of the songwriters.
Artists deserve better from their labels.
Broadcasters agree that performing artists deserve to be fairly compensated for their work. That has oftentimes not been the case, as musicians have too often been saddled with bad contracts with record labels that have left them with the short end of the stick. Over the years, countless lawsuits have been filed by artists alleging they have not received adequate compensation from digital royalties, unfairly lost the rights to their own musical works or been trapped in onerous contracts that prevent them from advancing their careers. If the forces behind the AMFA are interested in ensuring fair compensation for musicians, why have they not focused their attention on addressing these abuses?
Broadcasters understand the renewed push for a performance royalty stems from artists’ pain from the COVID-19 pandemic. Local radio can relate. Most radio stations saw steep declines in advertising revenues as local businesses cut their promotion budgets. Yet, the three major record labels actually prospered during the pandemic, experiencing double-digit yearly revenue growth and record earnings.
As broadcasters are still finding their economic footing as our nation recovers, imposing a new performance fee on local radio stations would stifle their recovery, potentially forcing some stations to eliminate jobs in order to continue their operations, hurting our local communities.
Congress is standing strong with local radio and its listeners.
Broadcasters remain open to working constructively with the music industry on a solution to this issue that works for everyone, instead of government intervention that would decimate the powerful partnership radio and artists have had over the years. That’s why local radio stations are grateful for the more than 170 members of Congress who have announced their support for the Local Radio Freedom Act, which opposes any performance royalty on local radio and supports the relationship between radio and the record industry that has benefitted generations of artists.