Rep. Mel Watt Introduces Free Market Royalty Act

Legislation would establish a radio performance right and provide open negotiations between music licensors and terrestrial radio
September 30, 2013 -- 11:08 am PDT

Rep. Mel Watt (D-N.C.) introduced the Free Market Royalty Act today. The bill would create a terrestrial radio performance right and repeal the compulsory license that currently obligates copyright owners to license their music to digital services, effectively strengthening their bargaining power in the free marketplace.

Currently, songwriters are compensated for terrestrial radio play, but musicians, producers and featured performers are not.

According to a summary of the bill issued by Watt, "Broadcasters like Clear Channel have said they want the marketplace and not the government to be the forum where the issue of performance rights is resolved. This legislation takes them at their word and allows all parties [broadcasters/webcasters and copyright owners] to negotiate in the marketplace. But it also provides equal rights and bargaining power to both sides, by allowing recording artists to refuse to license their music should they decide — something they currently cannot do."

The Recording Academy has been pursuing a performance right for musicians for several years, a campaign that has helped lead to several first-ever deals between labels and radio companies guaranteeing royalty payments to those labels' artists. The Academy has continued to pursue a larger legislative solution.

"The artist community thanks Rep. Mel Watt for his leadership on the royalty issue," said Recording Academy President/CEO Neil Portnow. "After years of the radio lobby claiming they want the free market to resolve the artist royalty issue, Mr. Watt has granted their wish. Now, with all sides having a right to their property, the broadcasters are free to negotiate fairly in the marketplace — and we will learn the true value of the music. We look forward to the bill's positive reception by the NAB."

According to Watt's summary, the bill continues to allow for certain exemptions for noncommercial and public radio, levels the royalty playing field for terrestrial, satellite and Internet radio, and ensures that performers and musicians will continue to share in 50 percent of the royalties generated by licensing agreements as they previously did under the compulsory license process. 

In a statement, the National Association of Broadcasters said, "NAB believes market-based negotiations like the recent Warner Music/Clear Channel accord demonstrate that this issue is already being addressed in the free market. This legislation would impose new costs on broadcasters that jeopardize the future of our free over-the-air service."

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