Making Sense of The Performance Rights Act

old radio This weekend I tuned in to a major radio station for the first time in a very long time, and was greeted with an advertisement I didn’t expect. Instead of load local car salesmen or a screechy techno beat inviting me to a night club where ladies get in free on Tuesdays, I was implored to write my congressman in opposition to the “Performance Tax”.

“Performance what?” I said.

I scrambled for the iPhone to try and understand what this new-fangled tax was, and after some extensive research (not on the iPhone), I got the real skinny on this “Performance Tax”. It turns out this is an old measure I heard about sometime ago called the Performance Rights Act, that’s been getting renewed attention

The Performance Rights Act is basically a measure drawn up by congress and supported by the RIAA, SoundExchange, and apparently Billy Corgan to make sure that performers are paid for the broadcast of their recordings.

You might be thinking “I thought broadcasters already had to pay the artists to play their songs". Technically they have to pay royalties to songwriters and publishers via ASCAP and BMI and other performance rights management associations. the argument here is that it leaves the performers of the song out in the cold. This includes people like session musicians, backup singers, and well, cover artists I suppose. Yep, that means that Orgy didn’t get a red cent in the form of royalties for their cover of ‘Blue Monday’, but I’m alright with that.

There is a whole lot to debate on this topic, and I only bit off the first few topics that were of most interest to me. Here they are in the order of least importance:

Does the broadcaster benefit directly from the songwriter/publisher, or the sound recording?

To me, This is the most immediate question. The current system is silly by modern standards in that the broadcaster indirectly pays the writer and publisher of the song, when they are actually benefitting directly from the recording. The written song is useless to a broadcaster until its put into a format he can broadcast. The broadcaster certainly shouldn’t be required to pay for both. It seems to me that if we were to remodel this system that we would create in a such a way that those who benefit directly from the work of another are required to pay for it:

Broadcasters would pay catalog holders (record labels) for access to their recordings. Catalog holders would in turn seek out the best artists to fill out their catalog, the goal being to sell access to songs in the catalog that fit the audience of a particular demographic. Artists would in turn find the best songs to play, whether they write them or buy them on the market from someone else.

If the current Act is passed and broadcasters are forced to pay this new fee, then perhaps the artists should be paying the composer/publisher royalty, not the broadcaster. The transfer of direct benefit occurred for one industry, why not another?

Why continue forcing a square peg into a round hole?

The impetus for this legislation can all be tied back to the transition from physical media (CD’s, LP’s, Cassettes, 8-tracks) to non-physical media (mp3s and digital broadcast). The existing rules worked when the sales of physical media were good enough to support the label and the pittance they paid their artists, but now that there is no physical media to sell the labels need money. The broadcasters aren’t performing the “free advertisement” service they once were since nobody is going out to buy the record of the artist they hear on the radio anyway (and why would they, they just need to tune into the radio to hear it played 15 times a day). The whole system needs to be scrapped, not just tweaked. Adding fees to the broadcaster isn’t going to restructure the industry in favor of the labels again, and it does very little for the artist. Perhaps a system like I mentioned above would be more appropriate, but even it shouldn’t be set in stone. Technology is changing constantly. Tracing the means of musical reproduction from sheet music to the digital file will make it obvious how many times our contractual process for managing those relationships has been reworked.

What this means is that we need to go back to the drawing board and come up with something that we can agree on for the duration of what is most likely a very short contract. Which brings me to my next point…

Why is the government negotiating contracts between artists, labels, broadcasters, writers and publishers?

The relationships between these industries are effectively contract negotiations. The catalog provider (record label) has this group of artists, these broadcasters would like to play those artists. Settle the terms in a contract, if those terms are violated then seek adjudication. Both industries stand to make (and lose) and lot of money by playing or not playing ball. Its an exercise in very simple risk management. Here are a few examples:

In my catalog of recordings I have the Beatles and the Rolling Stones. Its not a risky catalog to broadcast, therefore I can assume I will fetch a good value from the broadcasters for access to this catalog of recordings. In turn, I am required to pay the artists who recorded these songs a value that they negotiated, along with any contract negotiations I made with back up singers, session drummers, and composers to produce the song.

Likewise, I have a catalog full of Aphex Twin, Merzbow and Muslimgauze . Its a risky catalog, I don’t know if I’ll be able to fetch a good value for it. Perhaps I negotiate a contract with the broadcaster that allows me access to a per-play fee. If I do, and one of these songs becomes a hit, I will see an excellent return on investment. I am of course required to pay my artists, backup singers and composers the value I negotiated with them, and likewise down the chain.

I can even see artists independently getting in on this game, owning their own recordings and targeting broadcasters whose audience regularly listens to their music. For instance, if I were an indie electronic artist I would seek out college radio stations and encourage them to purchase my catalog for an excellent value.

Institutionalizing what is effectively contract negotiations leaves very little room for innovation in business models, and of course, is asking government to perform a function they were never meant to perform.

At any rate, the claim is that this legislation will put digital broadcasters like Pandora in parity with terrestrial broadcasters. Sure, but the disparity was created by the acts of a federal panel several years prior, making the fees for internet radio exorbitant. What’s an internet broadcaster to do? Why not support a bill that makes it harder for the competitor to compete (which is to say, use the same strategy my competitor did to raise my fees). As you can see we have a pattern of using regulation to fix prior regulation, ad nauseum. This seems to be the pattern when we ask government to be our contract negotiator.

I’ve left out a whole lot

Will this new legislation stifle or enhance independent artists? What will be the effect on the broadcast industry? Will broadcasters stop playing music altogether? There are a lot of unanswered questions here, but I think the points I made above make it clear what my position is on the Act; no good can come of this. As an artist I don’t know what my delivery format will be in the future, to be beholden to making potentially 50% of what I could be making because a record label took the other 50% of the royalty is unacceptable to me. To let the government write the terms of my contract for me, with their inability to expediently respond to market changes would be absurd.

2 thoughts on “Making Sense of The Performance Rights Act”

  1. You have it all wrong and you don’t value the separate items appropriately. There are two values at play here: The underlying composition (you need a good song to record) and the sound recording (you need a good version..if you doubt that play a Pat Boone version of ANYTHING). The sound recording without a good song is equally as WORTHLESS.

    Radio has long paid fairly for the the former and gotten the benefit of the latter for free. That part of the deal was at least agreeable and supportable when there was a legit non-black market recording industry. Today, that value is not being renumerated, while radio continues to benefit from it.

    All this bill does is put us in line with the rest of the world in terms of how they look at music. Actually less, since foreign artists enjoy further renumeration we can’t seem to get our heads around.

    No good can come out of it? The performers on the sound recordings would make money for the first time. The studio musicians working on these records would have a right to a royalty for the first time in recorded music history. A right they sorely deserve. Musicians like the Funk Bros. (Look them up) who have appeared on more hits than Elvis, The Stones and whoever else you can name combined would have made their first money in DECADES because of this bill.

    1. It’s clear that you missed my point entirely. My point is whether or not a BILL, voted on by a governmental state apparatus, is necessary. It is not and it sets a dangerous precedent. How the recording artists are paid, and what contract negotiations take place between performers, writers, and radio is no business of the state’s. Putting us in line with the rest of the world is of no concern to me, if other folks want to allow the government to mandate how their contract negotiations work, that is up to them.

      What you’re advocating is a form a syndicalism that I won’t condone. Performers should make money from radio play, because they negotiated that right before hand along with the production of the record. If they agree to waive those rights, then so be it. Performers can collectivize on their own if necessary in order to accomplish this. I see no reason for a government to do this for them.

      I suggest you read again my article in order to properly understand my article. I’m not arguing that performers shouldn’t be paid for their work. I’m arguing that governmental apparatuses need not and should not be in place to mandate it.

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