Performers, do you need a reminder that radio stations don’t pay for your music? The National Association of Broadcasters (NAB) thinks you do.
That isn't a misprint. In the US, terrestrial radio stations don’t pay a performance royalty in connection with master recordings. In fact, they’ve never paid one, even though they use those recordings to make themselves rich.
If that seems crazy, consider that the US is the only developed nation in the entire world that doesn’t have laws protecting creators from this exploitation. Even crazier is that the US is in line with China, Iran, and North Korea on this. While everybody else pays a performance royalty in connection with musical compositions—the royalties collected by performing rights organizations like ASCAP, BMI, SESAC, and GMR on behalf songwriters and publishing companies—performers and master owners are left out in the cold. Terrestrial radio stations don’t pay a dime in connection with their use of the masters.
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This past Wednesday, NAB President and CEO Gordon Smith testified before the Senate Commerce Committee. Smith was there to lobby Congress not to reauthorize STELA (the Satellite Television Extension and Localism Act) and allow its provisions to expire this year. The law, originally written in 1988, gave the budding satellite TV industry some traction against the larger broadcast and cable television companies. Passage of the act allowed satellite TV stations to reach smaller markets by giving them the ability to license third-party content at cheaper rates without negotiation.
They deemed it necessary at the time to introduce competition to the marketplace and give satellite TV a chance. But that isn’t the way the NAB wants their member stations’ content used. In his prepared statement, Smith said that STELA allowed providers to get “out-of-market network programming at a below-market rate and without having to negotiate for it.” His argument is that broadcasters are getting short-changed by third parties profiting unfairly from his member organizations’ content.
Sound familiar? Performers and record companies have been making the same argument for years. They have introduced laws; the NAB has lobbied against them. This time, however, their hypocrisy really shows. Smith is trying to close a loophole to benefit television stations while ignoring the fact that radio stations use the same loophole to profit off the backs of creators.
Satellite radio stations, digital radio providers, Internet rebroadcasters, and streaming services all pay performance royalties, so why not terrestrial radio stations? Why does the NAB get to pick its arguments? If we are talking about public performance rights, why is there a difference between television and radio?
Creators deserve fair rates for their work, and terrestrial radio stations have profited unfairly for decades. It’s time to call out the NAB’s hypocrisy. If it wants its members treated fairly, then it must treat performers and master owners fairly.
Mark Tavern is an artist manager, consultant, educator, administrator, and arts advocate with more than twenty years of music business experience. In addition to running his own management company, he currently teaches music business at LaGuardia Community College and before that at the Institute of Audio Research. Prior to 2012, Tavern worked at major record companies including Universal Music Group, SONY Music Entertainment, and BMG Entertainment. As an A&R Administrator with such labels as Island, Def Jam, RCA, and RCA Victor, he took part in more than 200 recordings, a dozen Broadway cast albums, and numerous reissue projects, including the GRAMMY®-winning 24-CD box set The Duke Ellington Centennial Edition. Visit his website for insider tips about the music business, and subscribe to his newsletter to get a free ebook: Listen Up! A Simple Guide To Getting Heard On Spotify.