Radio Royalty Redux
Louis Hau, 05.30.07, Forbes
A war is brewing over the royalties that the recording industry wants U.S. radio stations to pay for the right to play music. And though the fight has gone nowhere in the past, changes in the entertainment world could alter the outcome this time.
The battle centers on so-called "performance royalties." Radio stations already pay publishing royalties to songwriters or whoever owns the rights to a song's underlying composition and lyrics. But they've never been required to pay performance royalties, even though their counterparts in other industrialized countries do. Now the recording industry wants them to pony up.
While it is impossible to put a figure on what getting the performance rights might mean to the beleaguered recording industry, the $300 million a year the National Association of Broadcasters estimates radio stations already pay in publishing royalties offer a sense of scale.
Both sides have already begun campaigning, although no legislation has been introduced yet. In the past, the labels got nowhere. That's hardly a surprise, given the huge lobbying presence that broadcasters maintain in the halls of Congress.
But things have changed. Satellite and Internet radio stations, which didn't exist in the 1980s when the record companies last tried to get traditional radio stations to pay, are required to cough them up under the terms of the federal Digital Performance Right in Sound Recordings Act, which was passed in 1995.