Pandora, Spotify, YouTube—we all like to complain about how these and other online music-delivery platforms are not paying artists fairly. We’ve read the horror stories about major hits earning dismal online royalties, such as Pharrell Williams’ “Happy” bringing in a paltry $2,700 for 43 million streams on Pandora. We’ve seen the breakdown of income that these services provide indie musicians thanks to the transparency of artists like Zoë Keating. For artists with careers great and small, there seems to be no light at the end of the tunnel except the headlamp of a corporate freight train barreling down on our assets.
In fact, 2015 has the potential to be a watershed year for American musicians, composers, and producers in terms of copyright and how artists earn money for their work.
In late April, the House Judiciary Committee conducted its final hearing regarding copyright law, with U.S. Register of Copyrights Maria Pallante delivering the message that the morass of conflicting and unfair legislation must be corrected immediately. This follows the release earlier this year of the U.S. Copyright Office’s far-reaching music licensing study “Copyright and the Music Marketplace,” spearheaded by Ms. Pallante. (The document can be read online.)
Meanwhile, a bipartisan bill going through the House of Representatives is intended to provide fair compensation and increase transparency across the board in terms of performance royalties. H.R. 1733, known as the “Fair Play, Fair Pay Act,” would ensure that every type of performance of recorded music is subject to the same rules, and that music creators receive fair market value for their work. During her testimony, Pallante referred to the bill as an “excellent legislative framework,” and it is backed by musician-based organizations such as The Recording Academy.
Some of the inequities addressed by H.R. 1733 include the enforcement of royalty payments for digital performances of recordings produced before 1972. Up until now, SiriusXM and Pandora have been playing pre-1972 tracks without compensation, based on what they see as a loophole in federal law. This bill would settle the matter in favor of the artists.
Another aspect of the bill would require FM and AM stations (aka terrestrial radio) to pay performance royalties to artists and copyright owners of sound recordings just as online services do. The U.S. is the only industrialized country that doesn’t collect and dispense this class of royalty from terrestrial radio play, even when stations simulcast digitally over the Web.
This omission in the law has global implications for American artists: While other countries collect this type of royalty when they play U.S.- made recordings, our artists do not receive the money because the United States doesn’t have a reciprocal agreement with these nations. Consequently, the foreign-collected royalties stay in those countries. In 2013 alone, that cost artists and labels $60 million, according SoundExchange CEO Michael Huppe.
That terrestrial radio has an unfair advantage in royalty requirements is a reasonable complaint by Pandora, Spotify, and the other online services. But rather than remove the performance royalty altogether, which is what the digital services are pushing for, H.R. 1733 would bring our terrestrial stations up to international standards.
Another important bipartisan bill, H.R. 1457—the “Allocation for Music Producers Act” (aka the AMP Act), which is also part of H.R. 1733—requires SoundExchange to pay royalties to engineers and producers when a featured artist directs the organization to do so. (This is already being done voluntarily, but the Act puts it into law.) The good news is that the AMP Act doesn’t take away royalties that are due to other rights holders.
As you would imagine, there is serious opposition to these bills. Among the threats are the members of the MIC Coalition (miccoalition.org), a lobbying group made up of some of the biggest players—Google, iHeart Media, Pandora, NAB (the National Association of Broadcasters), Amazon, and, somewhat shockingly, NPR (National Public Radio). The coalition not only wants to keep the status quo in terms of what they pay, but they hope to lower the rates further.
Of course, every business wants to reduce its bottom-line costs. But with that perspective in mind, the MIC Coalition’s claim that the group includes “artist advocates” is disingenuous. While their mission statement offers lines such as “making music affordable and accessible so that consumers can continue to enjoy it…” and “connecting audiences with musicians for the betterment of the entire music industry,” the message is clear: If artist compensation is made equitable, how can these companies justify the expense of delivering this type of data? These services want you to believe that it is in the artist’s best interest that their music is used to sell advertising and subscription services without appropriate remuneration.
Remarkably, the MIC Coalition’s fourth and final mission statement includes “the need for transparent and direct ways to access music and compensate artists.” I think everyone can agree with this statement.
The tech industry regularly uses the term disruptive to describe something that shakes up the marketplace. Now that digital delivery is firmly in place, it’s time for music makers to disrupt the dominant paradigm of unfair compensation.
Make your voice heard. Contact your Congressional representatives and let them know you support “Fair Play, Fair Pay.” All it takes is a simple email to request that the law be changed to protect your right to be fairly compensated no matter how your recordings are delivered.