In a letter sent on Thursday to House Intellectual Property Subcommittee chairman Howard Berman, NAB president David Rehr urged politicians to investigate the recording industry’s business practices.
Rehr told Berman he believed that the four major record labels "effectively dominate the music business", often to the disadvantage of the artists.
The Subcommittee chairman has pledged to introduce legislation in October that would grant artists and record labels what he describes as "a long overdue" performance right for music played by terrestrial radio stations.
Unlike their counterparts in some jurisdictions, radio broadcasters in the US do not pay royalties for the songs they play. Instead, record companies have traditionally made their money from sales of music to consumers. With growing levels of piracy cutting into their profits, many in the industry now want to charge radio stations for the right to broadcast their music.
In July, the Subcommittee held a hearing entitled Ensuring Artists Fair Compensation: Updating the Performance Right and Platform Parity for the 21st Century, where artists Judy Collins and Sam Moore said that a performance right for terrestrial radio was a matter of fairness and equity.
In response, the NAB has asked the Subcommittee to hold more hearings to assess the relationship between artists and their record labels as part of its examination of the role of local radio in promoting music.
"A hearing that includes the Recording Industry Association of America and the four major record labels would allow members of the Subcommittee to explore more thoroughly the typical business practices of the recording industry and the dynamics of the relationships between the performers and the record labels," Rehr wrote. "If the goal is to improve the circumstances of performers and build the cadre of music into the future, the relationship between performers and record labels also bears examination."
He urged the influential Subcommittee to hold more hearings to consider a number of specific questions, including whether performers are fully informed about the details of the contracts they sign with record labels, and the minimum, maximum and average dollar amount the record labels receive from a performer’s recording.
The NAB argues that changing the law to help protect record companies and artists from the economic impact of piracy and new downloading practices by requiring broadcasters to pay royalties would unfairly penalize its members.
"Ten years ago, if people heard a song they liked on the radio they would go out and buy the album," Kristopher Jones, a spokesman for the NAB, told MIP Week. "Now they might just download the song. The record industry’s business model is in disarray and they are trying to recoup some benefits. Unfortunately they are turning on their greatest promoter: radio broadcasters."
Berman has already agreed to make some concessions for certain types of broadcasters. On September 27, he issued a statement in which he promised to include "special accommodations" for small and religious broadcasters in his legislative proposals.
"I am confident that we can do this in a way that is sensitive to the legitimate concerns and economic realities of broadcasters," Berman said. "My intention is to ensure that small and religious stations – and, indeed, all stations – will not be unduly burdened and that any new payment requirement will not be excessive."
