AM/FM Radio Royalty Loophole

Rep. Darrell Issa (R-CA), Dionne Warwick, Rep. Ted Deutch (D-FL) with musicians and supporters at the American Music Fairness Act Bill Launch Event, June 24, 2021.

Background

AM/FM broadcasters are the only form of radio today that doesn’t pay performers for their work. Digital radio sits alongside terrestrial radio on dashboards and in homes – yet those modern innovators pay for the music they use while AM/FM broadcasters pay nothing, even when their broadcasts are played through the same speakers to the same audience.

The reality is that AM/FM radio – terrestrial broadcast radio – uses music to draw an audience that in turn allows broadcasters to bring in billions in revenue from advertising—all while paying nothing for their primary product!

Adding to the injustice of the existing system is the fact that the impact of this unfair treatment doesn’t stop at the U.S. border. American music is by far the most popular music in the world. However, because U.S. radio broadcasters refuse to pay artists when they use their recordings on the air, American artists and record labels are denied the estimated $200 million in performance royalties annually that would be paid to them in nearly every other nation. Instead, that income is left on the table overseas and never makes it back to the U.S. economy.

Legislation to Address AM/FM Loophole

Since 2009, SoundExchange has been instrumental in getting Congress to introduce several bills to address this loophole, including the Performance Rights Act, the Fair Play Fair Pay Act, and the Ask Musicians for Music (AM/FM) Act.

The American Music Fairness Act

On June 24, 2021, Representatives Ted Deutch (D-FL) and Darrell Issa (R-CA), along with a bipartisan group of cosponsors, introduced H.R. 4130, the American Music Fairness Act. The American Music Fairness Act is endorsed by SoundExchange and has broad support throughout the music industry.

The American Music Fairness Act would:

  • Ensure performers are compensated when their songs are played on terrestrial radio.
  • Treat competing music platforms the same. AM/FM stations are the only media outlets that do not compensate artists for their music. It is long overdue for terrestrial radio stations to compensate artists for their music, just like streaming services, satellite radio, and every other platform that profits off copyrighted content. The AMFA would create a fair market value for music performance royalties by including terrestrial broadcasts in the existing Section 114(d)(1) of title 17 of the United States Code.
  • Protect small, local broadcasters. Consolidation in the music industry and the COVID-19 pandemic have impacted the true small and local radio stations that provide invaluable services to our communities. Small radio stations deserve to be treated differently than large media companies. The AMFA would exempt radio stations that fall under a $1.5 million in annual revenue AND whose parent companies make less than $10 million in annual revenue overall. For less than $2 per day ($500 annually), small and local stations can play unlimited music.
  • Exempt Qualified Public, college, and other noncommercial stations. These stations would only pay $100 a year.
  • Exempt super small stations. The smallest stations, those with revenue under $100,000 annually, would only pay just $10 a year.
  • Support American artists abroad. AMFA would ensure that foreign countries pay US artists when their songs are played overseas.
  • Protect Songwriters and Publishers. As with all previous versions of performance rights legislation, the bill ensures that there will be no harmful impact on the public performance rights and royalties payable to songwriters, musical work copyright owners, and publishers.

Take action: Tell your Member of Congress to support the American Music Fairness Act!