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Free Market Royalty Act Introduced

30 September 2013

Washington, D.C. – Today, the musicFIRST Coalition’s Executive Director Ted Kalo issued the following statement in response to Congressman Mel Watt’s introduction of the “Free Market Royalty Act”:

“The Free Market Royalty Act signals accelerating momentum for an AM/FM performance right and fair pay for music creators on all platforms. Like the 2009 Performance Rights Act, which passed both the House and Senate Judiciary Committees with broad, bipartisan majorities, this bill would end the decades old government taking of music creators’ performance property rights. It would, once and for all, establish a performance right for sound recordings broadcast over-the-air. The musicFIRST Coalition has been flexible in supporting a variety of approaches establishing a terrestrial right, including the 2009 bill, the 2012 Interim First Act, and this legislation. After saying no to each and every approach to date, the broadcasters have run out of excuses.

“After the 2009 bill passed Congressional committees, the National Association of Broadcasters (NAB) and music creators reached an agreement on performance rights that broadcasters ultimately walked away from. In Congressional hearings during the past year, Members of Congress have repeatedly expressed bewilderment that broadcasters are demanding payment when others use their television programming, but have yet to acknowledge their own obligation to pay for the music they use. This bill sends all parties back to the bargaining table to find common ground.

“For webcasters who are lobbying Congress for the ‘Internet Radio Fairness Act’ by claiming that the current ‘willing buyer, willing seller’ standard doesn’t actually represent a fair market price, this bill would facilitate free market negotiations, which would indisputably arrive at such a price for music.

“For all services, the bill preserves one-stop licensing for music. And, critically, for artists, it preserves protections in current law, including direct payment, the current 50% royalty share, and designated money for non-featured artists.

“In a transparent effort to thwart music creators having a performance right enshrined in law, the NAB has heralded what it calls ‘negotiations that are driven by the free market’ as a substitute for Performance Rights legislation. But there is no market for performance rights. The handful of deals between broadcasters and record labels that have been done can only be understood as a renegotiation of the webcasting rates since creators do not have any AM/FM performance right to negotiate. Simply put, there is no such thing as a market for the performance of music on terrestrial radio when there is no performance right. Because of NAB lobbying, music creators’ performance property right has been taken away and given to broadcasters before the negotiations even begin. It’s no surprise they want to keep it that way. Rather than providing a substitute for legislation, as some have suggested, the Clear Channel private deals appear to have inspired it.

“Leading experts on property rights pointed this out just last week when they said ‘artists who produce music deserve to hold real, effective rights’ that should be protected on all broadcast platforms – including AM/FM radio: ‘[C]ommon sense and basic fairness dictate that the medium of transmission should not affect the existence of these rights.’

“We believe the current statutory license system is a benefit to music creators and services, and we support the current system. But those services who benefit most from it are its greatest critics, and those broadcasters who use the ‘market’ as a dodge to thwart a performance right have done the most to undermine a true, free market.

“Thank you again, Congressman Mel Watt, for your continuing leadership on behalf of artists and music creators.”

• Please find Frequently Asked Questions about the Free Market Royalty Act here.

• Please find the Free Market Royalty Act Communications document here.

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