Radio Royalties Bill Envisions Bold Music-Licensing Changes

Most countries require both traditional radio stations and digital stations like Pandora to pay for recorded music and the underlying compositions, but traditional American stations are only legally required to pay for the compositions. However, a newly proposed bill, if passed, would change this by eliminating compulsory licensing for both digital and over-the-air stations altogether.

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SoundExchange is an independent organization that currently collects the royalties paid by digital services. Through the bill, it would be able to create a one-stop blanket license for all services that want to license the music. However, the bill would also allow it to decide what they charge, so services would be forced to pay the price or half the music. This proposed change stirs uneasiness because it is the government that traditionally oversees matters of performance royalties.

There have been similar attempts to remedy the issue in the past, most recently the Performance Rights Act of 2009, which would have made terrestrial radio stations also pay for the right to perform recorded music. However, this and other versions of the bill did not pass. On one hand, performers and record companies have been lobbying for traditional American stations to pay for both compositions and to perform because they feel they are being denied fair compensation. On the other hand, broadcasters argue that it would be a “performance tax” and that airplay itself is sufficient compensation by means of free promotion.

Many are divided on whether this new bill should be passed. Some believe that switching to fully private deal-making is a fair solution to compensate artists like other countries do. Some also believe that the music business is a complicated, ever-changing industry and the government should leave it to the people actually involved in the industry. Others believe that removing government oversight is an invitation to abuse by big record labels. However, most believe that the biggest hurdle is getting the bill passed. The Performance Rights Act of 2009 and many others failed to get enough support from Congress, and it is hard to say if this one would as well.

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