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Legislation Would Force Radio Stations To Pay Royalties
Major Blud writes: Congressman Jerrold Nadler (D-NY) and Marsha Blackburn (R-TN) introduced the "Fair Play Fair Pay Act" today that would end regulations that allow terrestrial radio stations to avoid paying royalties to artists and labels. Currently, AM/FM radio stations aren't required to pay royalties to publishers and songwriters. The proposed measure requires stations that earn less than $1 million a year in revenue to pay $500 annually. For nonprofit public, college and other non-commercial broadcasters, the fee would be $100 per year. Religious and talk stations would be exempt from any payments. Larger radio companies like iHeartMedia (858 stations in the U.S.) would have to pay more.
"The current system is antiquated and broken. It pits technologies against each other, and allows certain services to get away with paying little or nothing to artists. For decades, AM/FM radio has used whatever music it wants without paying a cent to the musicians, vocalists, and labels that created it. Satellite radio has paid below market royalties for the music it uses, growing into a multibillion dollar business on the back of an illogical 'grandfathered' royalty standard that is now almost two decades old," said Congressman Nadler.
"The current system is antiquated and broken. It pits technologies against each other, and allows certain services to get away with paying little or nothing to artists. For decades, AM/FM radio has used whatever music it wants without paying a cent to the musicians, vocalists, and labels that created it. Satellite radio has paid below market royalties for the music it uses, growing into a multibillion dollar business on the back of an illogical 'grandfathered' royalty standard that is now almost two decades old," said Congressman Nadler.
You are technically correct—the best kind of correct.
Radio stations pay licensing fees to ASCAP and BMI, who in turn pay the composers and publishers proportionally based on the percentage of airplay (and concerts and other performances) that their songs received. They do not pay the artists or the record companies, so the article is correct in that regard. But yes, they most certainly do pay the composers and publishers, albeit indirectly. That's the whole reason those performance rights organizations exist.
There is a caveat, however. Not all radio stations are considered "reporting stations". I know our college radio station diligently logged our plays for reporting purposes, but when it comes to actual royalty payouts, those organizations use a random sampling of radio stations, rather than tallying every song on every station. If your music is played only on a small number of radio stations, there's a good chance you won't get paid because you won't show up in their sampling. Now over time, they're getting closer and closer to full reporting, so this is becoming less of a problem, but it is something to keep in mind.
In any case, I would say that the summary is just plain wrong. In effect, radio stations pay royalties (indirectly) to composers and publishers, but not to performers and record labels.
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"Basically, they face a very imprecise but accurate estimate of their payout."
Wouldn't that be the other way around?
You have your precision, 0.0001% of airplay, but your accuracy is off. If a value has fine precision, but based on "loose" information, you can get precision without accuracy. Saying pi is 1.23456789098765432 is very precise, but saying it is 3 is more accurate. Random sampling would get you a precise number when you do your division, but if the sampling size is too small, it would be inaccurate.
Let's say you have 100 stations, but only sample 8 stations, playing 100 songs each.. Only 1 station plays Two Tons of Steel's "Death Trap" and reports it. They love the song and played it 5 times. That one station is in your sample of 8 stations. You do the numbers, and TTS have 5 of the 800 plays in the sample. TTS gets 0.625% of airtime. A nice precise number. However, it is inaccurate by an order of magnitude. They got 0.05% of airtime.