With an unforgettable acronym, the AM-FM Act would be a massive win for musicians.
After Johnny Cash made it big, he talked about how the zenith of his young dream was to be heard on the radio: “That was the big thing when I was growing up, singing on the radio. The extent of my dream was to sing on the radio station in Memphis. Even when I got out of the Air Force in 1954, I came right back to Memphis and started knocking on doors at the radio station.” Cash’s statement encapsulates the mythic quality of the radio for artists, be they legacy or emerging musicians. It’s a rite of passage. It’s a solid, even vital, promotional tool. It’s a foothold to a corner of the country, allowing artists to build a connection with their fan base on a local level. Radio is also thought to be representative of professional success, and in that sense, can be somewhat of a mirage. Because most performers (unless they have songwriting credits) are not paid when their songs are played on the radio.
Every recording contains two primary copyrights. While the copyright in the written composition (the songwriting copyright) is recognized in traditional, terrestrial radio, the copyright in the recording (the sound recording copyright) is not. Accordingly, while radio pays royalties to songwriters for their work, they do not pay artists for their contribution. That song you heard by that artist you love on the radio? Unless he or she was a songwriter, it was probably a free performance. A new piece of legislation, ingeniously titled the Ask Musicians for Music Act (AM-FM), aims to right this imbalance by obligating terrestrial radio to pay royalties to artists for their work. Specifically, the AM-FM Act would require creators to consent to the use of their work, and would then would ensure that terrestrial radio paid fair-market value to artists for their music. Artists would also be empowered to negotiate rates on their own behalf.
It should be noted that terrestrial radio is the only medium that does not compensate creators. Congress enacted the Digital Performance in Sound Recordings Act (DPRA) in 1995 to ensure protections for artists in the digital era. The DPRA required digital media platforms, like Spotify and Apple, to recognize the sound recording copyright and to compensate artists for their public performance. Significantly, the DPRA exempted terrestrial radio from this obligation. In an aggressive lobbying campaign, terrestrial radio argued that it had tremendous promotional value for artists. Essentially, artists would be compensated later by virtue of their career success for their radio exposure. With the advent of more media platforms however, terrestrial radio’s argument for its own relevance has been severely diminished.
Maybe, it’s not that radio isn’t so special anymore; maybe, it’s that radio never was. Within the global system, the United States is an anomaly in broadcast radio’s treatment of creators. Rep. Jerrold Nadler (D-N.Y.), a co-sponsor of the legislation, acknowledged this asymmetry in his statement: “The United States is an outlier in the world for not requiring broadcast radio to pay artists when playing their music, while requiring satellite and internet radio to pay. This is unfair to both artists and music providers.” He makes an important point. Throughout the world, 75 countries (including many European Union member-states) recognize a public performance right in radio and compensate accordingly. This means that an artist with global reach, such as Drake, would realize more income from radio play in Europe than from the United States, while artists with only regional recognition could take in less overall for being domestic stakeholders. It’s ironic, too, that a nation with such a powerful music industry offers domestic artists significantly less than their European counterparts. Following the enactment of the DPRA, America’s loss was Europe’s gain in that many American artists moved abroad to expand their sources of income. Europe, though historically more friendly to socialist constructs, takes a much more free-market, pro-property rights approach to paying creators what they’re due.
The private sector has explored innovative loopholes to supplant existing copyright law. For all of its bad press surrounding in the recent Taylor Swift/Scooter Braun scandal, Big Machine Label Group inked an unprecedented deal with Clear Channel Communication to gain royalties from radio play. The unique revenue-sharing agreement allowed Big Machine to participate in advertising revenue, while Clear Channel could circumvent established rates for digitally-streamed music in a more comprehensive framework. While the deal was also presumably a boon for Big Machine’s artists’ exposure, the radio giant implicitly acknowledged the importance of creators in providing music to the public. In a similar revenue-sharing deal between Big Machine and Entercom Communications, Big Machine negotiated the right to participate in Entercom’s terrestrial radio revenues. On the agreement, Entercom President and CEO David Field said: “This agreement represents a bold step forward to align our interests with those of Big Machine and their artists. While the deal comes with some significant costs and risks, we believe that by working with the labels and the artist community to establish a new business model, we will ultimately enhance the opportunities for all parties concerned.”
Many in terrestrial broadcast radio didn’t agree then, and they certainly don’t agree now — not when the stakes have heightened so considerably. In response to the proposed AM-FM Act legislation, the National Association of Broadcasters (NAB) President/CEO Gordon Smith said: “The NAB opposes the AM-FM Act, which will decimate the economics of America’s hometown radio stations that have launched the careers of countless musicians and exposed legacy artists to a new generation of listeners.” Smith noted that a bipartisan group of House Representatives and Senators have co-sponsored the Local Radio Freedom Act. The Local Radio Freedom Act is a non-binding resolution that opposes any new performance fee for terrestrial radio.
For all the technological advances ushered in by the digital era, terrestrial broadcast radio’s arguments for its own special status haven’t changed much. They argue, basically, that they’re doing artists a favor in providing free publicity. They argue that they serve a vital public interest (possibly their best argument). They argue that they won’t survive paying more royalties, that the legislation would effectively kill an industry. The imagery they convey is a salt-of-the-earth Americana tableau: a painterly Norman Rockwell-esque interpretation of good people in small towns united around a radio. And they’re not wrong. Radio still serves an important communal role, particularly among an older demographic. However, many of those “small-town” radio stations actually fall under the umbrella of 10 companies which were responsible for more than half of nearly $14 billion in radio industry revenues. They are no longer so small-town, then, so much as they are franchised. Moreover, the younger demographic has turned its head. Millennials and Generation Z increasingly turn to platforms like YouTube to find new artists and rely on smart speakers for better quality music.
It’s a big, bold ask: to secure protected status from a diminished position of bargaining power. It’s worth considering what terrestrial broadcast radio is actually asking Congress to do. In lobbying Congress to stymie any future fees, industry players are essentially asking it to act un-American on the world stage. They are asking for an unfair advantage over competitors like Spotify, Pandora, and Apple. They are asking the United States to stand with other nations that refuse to recognize a sound recording right — like such beacons of liberty and free enterprise as Iran, China, and North Korea. They are asking Congress to undercut domestic opportunities for the content-creating engine of an entire industry. In the first half of 2019, the domestic music market continued its double digit growth rates; its total revenues increased to $5.4 billion. Unsurprisingly, its seismic growth was not due to terrestrial radio. Streaming music reportedly comprised 80% of industry revenues. In sum, terrestrial broadcast radio makes the head-scratching argument that it is indispensable to an industry, while simultaneously asking Congress to help it survive.
Those in broadcast radio know the value of music. They rely on it to finesse communication in their outreach, to enhance their advertising, and to enrich communities with an ever-changing, vibrant soundtrack. They must love music, as they dedicate their professional lives to passionately promoting creators and their very best work. Yet, you can’t love a thing — not really — if you must weaken it in order to thrive. Those in broadcast radio who are frightened of the implications of new media platforms fail to recognize that many artists echo their concerns as they try to forge careers in the digital era. They, too, are treading water, trying not to drown. It’s just that Congressional leaders haven’t built them a life-raft.
Perhaps, Johnny Cash wouldn’t have dreamed so reverently of being heard on the radio had he known that, for so many musicians, it only ever offers a dream.