SoundExchange Statement Regarding Introduction of The “Free Market Royalty Act”

SoundExchange Statement Regarding Introduction of The “Free Market Royalty Act”

WASHINGTON – September 30, 2013 – SoundExchange issued the following statement in response to the introduction of the “Free Market Royalty Act,” by Congressman Mel Watt (D-NC):

“We are grateful for Congressman Watt’s leadership, and commend his commitment to protecting the creators of music. Because of a loophole in the Copyright Act, AM/FM radio stations make billions of dollars a year off of the creations of working musicians, without having to pay those musicians a dime. The “Free Market Royalty Act,” aims to plug this loophole and reverse the decades of injustice that American recording artists have endured.

Congressman Watt’s bill also indulges the National Association of Broadcasters’ (NAB’s) argument that marketplace ‘private negotiations’ are the sole solution to the lack of a terrestrial right.   As this bill recognizes, it is not possible to have a fair negotiation in the marketplace when broadcasters are simply allowed to play the artists’ music even if no deal is reached. It’s common sense:  If a radio station can use unlimited music, without ever needing to even consult with the musicians, how can it be considered a negotiation?

Congressman Watt’s bill also responds to the argument made by some Internet radio services that the current system is “broken” because the Internet radio rates are set under a “willing buyer/willing seller” standard.  The only thing that is “broken” about the current system is that all radio platforms aren’t required to pay fair market value for the music that they use.

SoundExchange believes musicians should receive a fair market value for their work – across all radio platforms. We believe the current statutory system for digital services works well where creators are paid fairly.  So long as the rules for setting rates are fair, there is no reason a similar system requiring AM/FM broadcasters to compensate performers wouldn’t also work.

We also support the statutory license, which provides radio services with access to each and every commercially released sound recording, and ensures that musicians and are paid directly for their creative contributions. At the same time, Congressman Watt’s bill, by proposing that the statutory license be eliminated, will provoke an important and vigorous discussion of the value of that system, and we welcome the opportunity it presents.”