Respecting Artists with the American Music Fairness Act (U.S. House Committee on the Judiciary)

Hearing	Respecting Artists with the American Music Fairness Act
Committee	U.S. House Committee on the Judiciary
Date	February 2, 2022

 

Hearing Takeaways:

• The American Music Fairness Act: The hearing focused on the American Music Fairness Act, which would enable singers, producers, and studio musicians to obtain performance royalties when their recorded works were played on terrestrial radio. Currently, broadcasters do not pay a performance royalty to a song’s performing artists when the song is played via terrestrial radio (although they do pay the song’s writers for terrestrial radio airplay). However, broadcasters do pay a performance royalty to a song’s preforming artists when the song is simulcast on a streaming platform. This lack of a performance royalty is justified on the basis that broadcasters provide performing artists with promotional value through the airplay of their music on terrestrial radio, which in turn drives album sales, tour interest, and publicity for the artists.
  • Protections for Smaller Broadcast Radio Stations: The American Music Fairness Act would cap the performance royalty fees charged to smaller broadcast radio stations for terrestrial radio airplay. The legislation would have commercial and public terrestrial radio stations that made less than $100,000 annually pay $10 in performance royalties, public terrestrial radio stations that made between $100,000 and $1.5 million annually pay $100 in performance royalties, and commercial terrestrial radio stations that made between $100,000 and $1.5 million annually pay $500 in performance royalties.
• Views of American Music Fairness Act Supporters: Some Committee Members, including Full Committee Chairman Jerrold Nadler (D-NY), Ms. Estefan, Mr. Massarsky, Mr. Mitchell, and Mr. Pomeroy, expressed support for the American Music Fairness Act. They called it unfair that performing artists were not able to financially benefit from the use of their recorded works on terrestrial radio and stated that this legislation would support working class musicians. Of note, support and opposition for the American Music Fairness Act did not align neatly along party lines.
  • Impact on Performing Artists: Supporters of the legislation remarked that this legislation would provide much needed financial support to working class artists and musicians that could not easily preform and tour (especially during the COVID-19 pandemic). They also noted how many backing musicians, producers, and engineers did not benefit from the promotional value gained from the terrestrial radio airplay of their recorded works, as their involvements in the recorded works were not always obvious to the listener.
  • Payment of Performance Royalties by Other Types of Media: Supporters of the legislation also highlighted how satellite radio, digital radio, television, commercials, and films all compensated musicians when their recorded works were used to create revenue. They contended that it was therefore unfair for radio broadcasters to not have to pay a performance royalty for terrestrial radio airplay of recorded works. Mr. LeGeyt asserted however that these other types of media were fundamentally different from terrestrial radio. He stated that terrestrial radio was hyper local and completely free, which meant that it had very different economics as compared to these other types of media.
  • Artist Access to Performance Royalties Collected from Foreign Terrestrial Radio Airplay: A key area of frustration among the legislation’s supporters was the fact that the U.S.’s lack of a performance right for terrestrial radio airplay meant that U.S. artists could not receive the performance royalties being collected for the overseas terrestrial radio airplay of their recorded works. Other countries refuse to remit these royalties until the U.S. collects and remits performance royalties for the terrestrial radio airplay of recorded works by foreign artists. Supporters of the legislation noted that an estimated $200 million in performance royalties for U.S. artists generated by foreign terrestrial radio airplay were not being remitted annually. 
  • Dispute of Broadcast Radio’s Promotional Value: Mr. Massarsky and Ms. Estefan argued that broadcast radio’s promotional value had diminished over time in light of streaming and other market developments. Mr. Massarsky highlighted that 53 percent of all songs played on the radio were considered gold (meaning established hits), which meant that these songs did not heavily benefit from promotion. Mr. LeGeyt asserted however that artists and their record labels still recognized the important value that broadcast played in terms of promotion and commented that this recognition was evident in award show acceptance speeches, social media posts, and direct radio station outreach seeking airplay. 
• Views of American Music Fairness Act Opponents: Some Committee Members and Mr. LeGeyt expressed concerns that the American Music Fairness Act would threaten the viability of broadcast radio stations through disrupting long-established business models. 
  • Impact on Smaller Broadcast Radio Stations: Mr. LeGeyt contended that the proponents of the legislation were misrepresenting the legislation’s impact on radio stations. He disputed the robustness of the legislation’s protections for small broadcast radio stations and stated that the legislation would impact 200 radio station groups that hold more than 4,000 radio stations. He also remarked that the legislation’s capped performance royalty rates would still burden very small broadcast radio stations and undermine their ability to provide local services. Rep. Darrell Issa (D-CA) noted however that the Sam and Joyce Moore had a foundation that offered to provide relief to small radio stations that would be burdened by the legislation’s minimum performance royalty obligations.
  • Impact on Public Services: Opponents of the legislation emphasized how broadcasters provided local news, community relevant programing, and emergency alerts. They raised concerns that imposing royalty fees on radio stations could reduce the ability of stations to provide these services. Mr. Massarsky remarked however that the proceedings for establishing performance royalty rates for terrestrial radio airplay under the legislation would take all factors into account, including the public benefits provided by radio broadcasters.
  • Impact on Longstanding Arrangements: Mr. LeGeyt discussed how the issue of performance rights for terrestrial radio airplay involved a set of property rights that were developed over 100 years ago and noted how both the radio and music industries had developed their business models around these property rights. He asserted that the American Music Fairness Act would upend this longstanding approach and impose new costs on broadcasters.
  • Industry Efforts to Address Performance Royalties for Terrestrial Radio Airplay of Recorded Works: Mr. LeGeyt discussed how his organization, the National Association of Broadcasters (NAB), had tried to work with the music industry to develop a mutually beneficial proposal to address the issue of performance royalties for terrestrial radio airings of recordings. He testified that the NAB’s performance royalty proposals were legitimate and made in good faith and stated that the music industry had failed to provide a formal counteroffer to the NAB’s proposals. However, Rep. Issa and Mr. Massarsky criticized the NAB’s proposals on this topic for seeking to revise existing royalty structures for streaming and songwriting.
• Other Topics Discussed during the Hearing: Committee Members raised several other areas of interest related to the American Music Fairness Act, the music and broadcast industries, and copyright protections more generally.
  • American Music Fairness Act’s Impact on Higher Cost of Living Areas: Rep. Zoe Lofgren (D-CA) noted how a small radio station in her state of California would likely have to pay higher salaries than the national average given her state’s higher cost of living. She expressed her hope that the American Music Fairness Act’s protections for smaller broadcast radio stations could account for these regional cost differences.
  • American Music Fairness Act’s Impact on Minority-Owned Broadcast Stations: Rep. Sheila Jackson Lee (D-TX), Rep. Karen Bass (D-CA), and Rep. Sylvia Garcia (D-TX) expressed interest in ensuring that the American Music Fairness Act did not threaten the viability of minority-owned broadcast stations.  
  • Ability for Artists to Directly Negotiate Rates with Broadcasters: Rep. Tom McClintock (R-CA) and Rep. Thomas Massie (R-KY) expressed interest in ensuring that the American Music Fairness Act would enable music performers to determine the specific arrangements in which their recorded works could be played on terrestrial radio. Mr. LeGeyt noted however that the licensing under the American Music Fairness Act would be compulsory for music performers. He commented that it would be “extremely cumbersome” to develop bespoke performance rights agreements between the thousands of U.S. broadcast radio stations and the thousands of U.S. copyright holders. He stated that the legislation did intend to permit a local station group to directly negotiate with copyright holders in order to develop bespoke arrangements.
  • Impact of Monopolies on Radio Broadcasters and Musicians: Rep. David Cicilline (D-RI) remarked that the challenges faced by both radio broadcasters and music artists were both the result of the harmful behavior of giant companies. He elaborated that large technology companies created significant challenges for radio broadcasters while large music studios created significant challenges for music artists. He expressed his hope that the Committee would soon mark-up the Journalism Competition and Preservation Act of 2021, which he commented would provide relief to local broadcasters.
  • Differential Treatment of Songs and Inventions: Rep. Massie also noted how patents under the U.S. patent system only lasted 20 years. He stated however that royalties for songs lasted the length of the author’s life plus 70 years. He commented that this differential treatment of songs and inventions was unfair and expressed interest in aligning how these intellectual property rights (IP) were treated.

Hearing Witnesses:

1. Ms. Gloria Estefan, Singer, Songwriter, Musician, and Recording Artist
2. Mr. Curtis LeGeyt, President and CEO, National Association of Broadcasters
3. Mr. Barry Massarsky, Partner and Co-Leader, Music Economics and Valuation Services Practice, Citrin Cooperman Advisors LLC
4. Mr. Lawrence “Boo” Mitchell, Engineer, Producer, Musician, and Owner, Royal Studios
5. Mr. Dave Pomeroy, President, Nashville Musicians Association, AFM Local 257

Member Opening Statements:

Full Committee Chairman Jerrold Nadler (D-NY):

• He lamented the fact that terrestrial radio broadcasters were able to play music without paying the performing artist a royalty and noted how terrestrial radio was unique in this respect.
  • He called on Congress to correct this differential treatment.
• He stated that the impact of this differential treatment had grown increasingly inequitable over time in light of changes to the musical industry.
• He mentioned how Congress had passed the bipartisan Orrin G. Hatch–Bob Goodlatte Music Modernization Act (Music Modernization Act) in 2018, which updated the U.S. copyright system governing music.
• He called on Congress to build upon this law through passing the bipartisan American Music Fairness Act, which would require terrestrial radio stations to pay performance royalties for the recordings that they broadcast.
  • He thanked Rep. Ted Deutch (D-FL) and Rep. Darrell Issa (R-CA) for their leadership on the legislation.
• He noted that broadcasters had argued that they should not have to pay a performance royalty because their airplay provides promotional value that leads to fair compensation for artists through album sales, tour interest, and publicity.
• He contended that this claim was always dubious and asserted that the advent of popular digital media and streaming platforms had further undermined this claim.
  • He stated that streaming services, satellite radio, and internet radio were at a competitive disadvantage to terrestrial radio as a result of the different royalty rules.
• He then remarked that the failure of U.S. law to establish a performance right for terrestrial radio airplay meant that singers and other musicians missed out on royalties when their music was broadcast overseas.
  • He noted how nearly every other developed country compensated performers for playing their music on terrestrial radio.
• He indicated that this lack of a performance right for terrestrial radio airplay meant that American artists were deprived of up to $200 million annually, which cost the U.S. economy.
  • He commented that providing such a right was fundamentally an issue about fairness.
• He then stated that providing a performance right for terrestrial radio airplay would be especially important for working class performance artists that could not readily tour and perform.
  • He noted how the COVID-19 pandemic had limited the ability of artists to tour.

Rep. Steve Chabot (R-OH):

• He noted how the nine largest radio stations currently had a combined market capitalization of less than $4 billion while the three largest record companies had a combined market capitalization of over $200 billion.
• He remarked that Congress must be careful to not further endanger broadcasters, especially given how they provided millions of dollars of promotional value to artists.
  • He also noted how the hearing did not include witnesses representing small and minority-owned radio stations.
• He then discussed how local radio broadcasters did not exclusively play music on their stations and noted how these broadcasters also served a public interest.
  • He elaborated that local broadcasters provided local news, community relevant programing, and emergency alerts.
  • He further highlighted how local broadcasters had worked to provide COVID-19 education and vaccine awareness, as well as provide free publicity to struggling small businesses during the pandemic.
• He mentioned how the U.S. Federal Emergency Management Agency (FEMA) heavily relied upon terrestrial radio during periods of emergency and raised concerns that imposing new royalty fees on radio stations could reduce the ability of stations to provide emergency alerts.

Rep. Hank Johnson (D-GA):

• He remarked that artists ought to be compensated for their work being played on terrestrial radio stations.
  • He noted that the COVID-19 pandemic had demonstrated the importance of performance royalties given how the pandemic had prevented artists from touring.
• He applauded the American Music Fairness Act’s design for providing lower royalty rates for small and independent radio stations.

Rep. Darrell Issa (R-CA):

• He noted that the debate over a performance right for terrestrial radio airplay had been going on for the previous half century and referred to the absence of such a right as a “loophole.”
• He disputed the broadcasting industry’s description of a performance royalty for terrestrial radio airplay as a tax and mentioned how a performance royalty was already being paid on streaming.
• He noted how the American Music Fairness Act would impose a lower performance royalty rate on smaller terrestrial radio stations that would amount to no more than $500.
  • He commented that this amount was likely much lower than the NAB membership fees for these stations.

Witness Opening Statements:

Ms. Gloria Estefan (Singer, Songwriter, Musician, and Recording Artist):

• She called on Congress to support the American Music Fairness Act.
• She discussed how only songwriters currently receive payment when a performing artist’s song is played on terrestrial radio.
  • She explained that the performing artists of a song referred to the song’s singers, producers, and studio musicians.
• She stated that the absence of a performance royalty for terrestrial radio airplay could be especially problematic for older artists and mentioned how the COVID-19 pandemic had reduced the ability of artists to do live performances.
  • She commented that the absence of a performance royalty for terrestrial radio airplay coupled with the inability to do live performances had made it impossible for many old artists to derive revenue from their works.
• She noted how terrestrial radio constituted the only platform that did not compensate artists for the sound recordings they used to fuel their businesses.
  • She asserted that terrestrial radio was unique in that it was able to make use of someone else’s IP without needing to obtain permission or provide compensation.
• She indicated that the U.S. was unique amongst developed countries in its absence of a performance right for terrestrial radio airplay.
• She further noted that other countries were able to collect royalties on American music played overseas without giving those royalties to the American performing artists that made those songs.
  • She testified that this dynamic cost the U.S. economy and performing artists more than $200 million annually.
• She lastly applauded the American Music Fairness Act for creating protections for small and local terrestrial radio stations.

Mr. Barry Massarsky (Citrin Cooperman Advisors LLC):

• He discussed how terrestrial radio relied upon an “extraordinary” amount of music as its core input in order to drive $7.6 billion in annual revenues.
  • He noted that 79 percent of broadcast radio’s revenues were attributable to radio stations whose purpose was to provide music to its listening audience.
• He estimated that over 714 million non-licensed sound recordings were performed each year on commercial radio stations.
• He noted that the lack of a performance royalty for terrestrial radio airplay was based on the idea that terrestrial radio airplay provided promotional value to performing artists.
• He contended that this justification for a lack of a performance royalty for terrestrial radio airplay had been “shattered” in light of recent market developments.
• He mentioned how only 36 percent of the music played on radio could be classified as newly released, which would mean that this music would heavily benefit from promotion.
  • He indicated that 53 percent of all songs played on the radio were considered gold (meaning established hits), which meant that these songs did not heavily benefit from promotion.
• He also stated that the majority of new music was being discovered on non-terrestrial radio platforms, including social media and digital services.
• He then testified that 67 percent of the time on music formatted radio stations was occupied by the playing of music and that only 4 percent of the operating costs for radio stations were related to the playing of music.
  • He contended that the absence of a performance royalty for terrestrial radio airplay was no longer economically rational given how much radio stations depended on music.
• He concluded that the changing music listening landscape had reduced the promotional benefits of radio airplay and highlighted that the American Music Fairness Act included provisions to protect smaller radio stations.

Mr. Lawrence “Boo” Mitchell (Royal Studios):

• He recounted how the very popular song “Uptown Funk” was recorded in his studio and noted how the song remains one of the twenty most played songs of all time on American radio.
• He testified that no one involved in the recording of “Uptown Funk” had ever been paid by radio broadcasters because of the U.S.’s absence of a performance royalty for terrestrial radio airplay.
  • He contended that the terrestrial radio industry was unique in its ability to make use of IP without the IP creator’s permission and without compensating the IP creator.
• He further noted how the U.S. musicians involved in making “Uptown Funk” were not compensated when the song played on foreign terrestrial radio stations.
  • He noted that while foreign countries did provide performance royalties to artists for their works played on terrestrial radio, he explained that foreign countries have refused to compensate American artists for their works played on terrestrial radio until the U.S. provides reciprocal compensation for foreign artists that have their works played on U.S. terrestrial radio.
• He stated that this legal dynamic resulted in U.S. artists losing hundreds of millions of dollars every year in international royalties.
• He remarked that the American Music Fairness Act would fix the aforementioned problems through enabling artists, performers, vocalists, producers, and other music makers involved in the creation of a sound recording to receive compensation for their music that was played on terrestrial radio in the U.S.
  • He highlighted how the legislation would safeguard the royalties received by songwriters and publishers for terrestrial radio airplay.
  • He further noted how the legislation provided key protections to small broadcasters to ensure that these broadcasters could remain viable.
• He called on Congress to promptly pass the American Music Fairness Act and stated that the failure to promptly advance the legislation would result in older artists never receiving compensation for their music being played on terrestrial radio.
• He lastly discussed how the COVID-19 pandemic was continuing to disrupt touring, live music, and recorded music and suggested that performance royalties for radio airplay could provide many artists with financial security during this uncertain period.

Mr. Curtis LeGeyt (National Association of Broadcasters):

• He remarked that broadcast radio was unique among platforms in that it was always on, local, and completely free to all listeners.
  • He highlighted how local radio stations were working to keep listeners connected, safe, and entertained during the COVID-19 pandemic.
• He discussed how his organization, the NAB, had tried to work with the music industry to develop a mutually beneficial proposal to address the issue of artist performance royalties for the terrestrial radio airplay of recordings.
  • He stated however that the music industry had been resistant to developing a compromise proposal to address this issue.
• He asserted that the NAB’s performance royalty proposals were legitimate and made in good faith and testified that the music industry had failed to provide a formal counteroffer to the NAB’s proposals.
• He stated that the American Music Fairness Act would impose a new royalty on local radio broadcasters that was financially untenable for broadcasters of all sizes and unjustified as a matter of policy.
• He expressed the NAB’s support for the bipartisan Local Radio Freedom Act, which opposed any new performance fees on broadcast radio.
  • He also expressed the NAB’s commitment to engage in discussions that would further their partnership with the music industry and enhance their unique value to artists without diminishing their ability to serve local communities.
• He further asserted that artists and their record labels recognized the important value that broadcast played in terms of promotion and commented that this recognition was present in award show acceptance speeches, social media posts, and direct radio station outreach seeking airplay.
  • He contended that the American Music Fairness Act would undermine the relationship between broadcasters and artists.

Mr. Dave Pomeroy (Nashville Musicians Association, AFM Local 257):

• He expressed support for the American Music Fairness Act and called the legislation critically important for backup musicians and vocalists.
• He mentioned how he was a background musician on the hit country song “She’s in Love with the Boy” and testified that none of the musicians involved with the recording of that song had ever been compensated for terrestrial radio airings of the song.
  • He called this situation unfair.
• He noted how terrestrial radio stations only paid the songwriters and publishers of a song for the song’s terrestrial radio airplay.
  • He mentioned that the only other countries that did not pay artists, singers, and musicians for the use of their work on terrestrial radio are Iran and North Korea.
• He stated that while the U.S. created the vast majority of the world’s music, he asserted that it was “almost impossible” for American musicians to get the money that they were rightfully owed from overseas terrestrial radio airplay.
• He discussed how between $200 million and $300 million was being held by foreign collectives annually and commented that these collectives relied on the “poor” excuse that the U.S. did not pay foreign musicians for their small share of the U.S.’s terrestrial radio airplay.
  • He stated that this money would remain “trapped” overseas until Congress were to pass legislation that created a performance royalty for terrestrial radio play.
• He remarked that U.S. terrestrial radio stations were making billions of dollars through using the works of musicians and mentioned how five of the largest broadcasters had made $1.6 billion in revenue during the third quarter of 2021.
  • He indicated that this 2021 third quarter revenue constituted an increase of 20 percent from the previous year.
• He disputed the assertion from U.S. terrestrial radio stations that they could not afford to pay musicians for the use of their works.
• He contended that the American Music Fairness Act’s provisions should have been part of the Music Modernization Act and stated that radio broadcasters were unique in not compensating musicians for the use of their works.
  • He noted how satellite radio, digital radio, television, commercials, and films all compensated musicians when the works of a musician were used to create revenue.
• He asserted that the American Music Fairness Act would not drive small radio stations out of business or hurt songwriters and mentioned how the legislation contained several provisions to ensure that small, independent, and community radio stations would not be “unduly burdened.”
• He contended that the American Music Fairness Act would provide financial security to working class American musicians.

Congressional Question Period:

Full Committee Chairman Jerrold Nadler (D-NY):

• Chairman Nadler asked Ms. Estefan to discuss how the lack of a public performance right for the terrestrial radio airplay of recorded works impacted non-featured working-class musicians and sound engineers that worked on popular songs. He asked Ms. Estefan to indicate whether the current failure to fully compensate music creators was harming musical innovation.
  • Ms. Estefan remarked that the current failure to fully compensate music creators had made it impossible for many people to make a living in the music industry. She recounted how she was unable to make money from the terrestrial airplay of some of her biggest hit songs because she was not a writer of the songs. She indicated that she and her music group had been able to make money from their songs through touring and record sales. She noted however that record sales were now very rare as a result of new technologies. She thanked Congress for passing the Music Modernization Act and commented that this legislation provided artists with revenue for the streaming of their works.
• Chairman Nadler asked Mr. Pomeroy to indicate whether the promotional value of terrestrial radio airplay was enough to compensate musicians.
  • Mr. Pomeroy answered no. He contended that promotional value of terrestrial radio airplay for the main artists was becoming increasingly negligible. He also asserted that the promotional value of terrestrial radio airplay for backing artists was meaningless. He stated that the lack of compensation for terrestrial radio airplay was forcing some musicians to take second jobs or leave the music industry.
• Chairman Nadler asked Mr. Massarsky to indicate whether broadcasters could afford to compensate musicians for the terrestrial radio performances of their works.
  • Mr. Massarsky answered affirmatively. He remarked that the lack of a performance right for terrestrial radio airplay was predicated on the notion that such airplay provided artists with promotion, which he asserted was no longer relevant. He also highlighted how the American Music Fairness Act would impose a lower performance royalty rate for smaller terrestrial radio broadcasters. He noted how the majority of content being played on terrestrial radio stations was sound recordings and asserted that artists should be compensated for the airplay of these recordings.

Rep. Steve Chabot (R-OH):

• Rep. Chabot noted how most local radio stations were small businesses. He mentioned how proponents of the American Music Fairness Act had argued that the legislation would not significantly burden smaller radio stations because it would impose a lower performance royalty rate on these stations. He asked Mr. LeGeyt to discuss how the American Music Fairness Act would impact small radio stations.
  • Mr. LeGeyt first contended that the proponents of the American Music Fairness Act were misrepresenting the legislation’s impact on radio stations. He remarked that much of the focus was being placed on a subset of large radio station groups and stated that the legislation would impact 200 radio station groups that hold more than 4,000 radio stations. He commented that these stations were small businesses and would be adversely impacted by the legislation. He then asserted that the legislation’s lower performance royalty rate on very small radio stations was still very significant for these stations. He added that these small radio stations already paid royalties to musicians when they simulcasted their stations over a stream.
• Rep. Chabot asked Mr. LeGeyt to address how the passage of the American Music Fairness Act would impact the average consumer.
  • Mr. LeGeyt discussed how the local focus and free nature of local radio stations was very beneficial for communities. He added that these local radio stations played key roles during periods of uncertainty through conveying important information to the public. He contended that imposing higher costs on local radio stations would undermine the ability of these stations to provide local news to their communities. He also remarked that the American Music Fairness Act would reduce music airplay on radio stations, which would harm both the radio and music industries.
• Rep. Chabot also discussed how broadcast radio played a key role in supporting FEMA and the U.S.’s emergency response infrastructure. He asked Mr. LeGeyt to discuss how the imposition of new performance royalty fees on community radio stations could impact the U.S.’s public warning system.
  • Mr. LeGeyt called local radio stations the “backbone” of the emergency alert system. He stated that reducing the revenues for local radio stations would thus jeopardize the ability of these stations to support the emergency alert system. He also emphasized how broadcasters maintained a resilient and redundant system that ensured that emergency communications could still go out when cellular service no longer functioned. He further noted how radio stations provided “hyper local focus” messages.

Rep. Zoe Lofgren (D-CA):

• Rep. Lofgren asked Mr. Massarsky to identify the factors that went into determining what constitutes a small radio broadcaster under the American Music Fairness Act. She also asked Mr. Massarsky to indicate whether regional variations in salary schedules and other business costs were factored into the American Music Fairness Act’s thresholds for small business determinations.
  • Mr. Massarsky remarked that the developers of the American Music Fairness Act considered the concentration of revenue that was controlled by the top tier of radio broadcasters. He stated that the legislation sought to protect the broadcasters outside of this top tier that might have a more difficult time affording a new performance royalty obligation.
• Rep. Lofgren interjected to note how a small radio station in her state of California would likely have to pay higher salaries than the national average given the state’s higher cost of living. She expressed her hope that the American Music Fairness Act’s proposed protections for small broadcast radio stations accounted for these regional cost differences.
  • Mr. Massarsky stated that the small radio station that Rep. Lofgren had described would be protected under the American Music Fairness Act.
• Rep. Lofgren then noted how Mr. Pomeroy’s testimony had stated that other countries did not remit terrestrial radio performance royalties generated abroad to U.S. musicians as a result of the U.S.’s lack of a performance right for musicians. She asked Mr. Pomeroy to further explain this dynamic.
  • Mr. Pomeroy recounted how the 2012 World Intellectual Property Organization (WIPO) Conference in Beijing had developed a treaty involving 131 countries that established the principle of “no collection without distribution.” He noted how collectives from around the world were obtaining performance royalties on terrestrial radio airplay. He indicated that these collectives were holding onto the performance royalties of U.S. artists on the pretense that the U.S. did not pay performance royalties to foreign artists. He referred to this dynamic as an imbalance of trade given how the U.S. made the vast majority of the world’s music. He stated that U.S. artists could access these performance royalties if the U.S. were to establish a performance right for terrestrial radio airplay. He commented that this ability to access the royalties would create a new source of taxable income for U.S. artists and help provide these artists to obtain financial stability.
• Rep. Lofgren criticized the U.S.’s lack of a performance right for musicians for terrestrial radio airplay and called on Congress to establish such a right. She specifically dismissed the contention that terrestrial radio airplay had significant promotional value for older songs.

Rep. Darrell Issa (D-CA):

• Rep. Issa disputed Mr. LeGeyt’s previous statement that the American Music Fairness Act’s low performance royalty rates for small broadcast radio stations would impose significant burdens on these stations. He mentioned how Sam and Joyce Moore had a foundation that offered to provide relief to small broadcast radio stations that would be burdened by the legislation’s minimum performance royalty obligations. He then asked Mr. LeGeyt to indicate whether the NAB had sought to reduce the performance royalty rates for streamed music in exchange for establishing a performance royalty for terrestrial radio broadcasts.
  • Mr. LeGeyt testified that the NAB had always taken an “holistic approach” when working to develop a performance royalty structure with the music industry.
• Rep. Issa commented that NAB’s proposal to revisit performance royalties for streamed music was a “non-starter.” He noted how broadcast radio stations were already paying performance royalties to artists when their stations were streamed. He then asked Mr. Mitchell to indicate whether there existed a difference between digital radio broadcasting and streaming in terms of sound quality.
  • Mr. Mitchell remarked that the sound of digital radio broadcasting and streaming were the same, despite the difference in delivery methods.
• Rep. Issa lastly asked Mr. Massarsky to indicate whether the various public benefits that radio broadcasters provide could be taken into account and lead to a lower performance royalty rate for musicians for the terrestrial radio airplay of their music.
  • Mr. Massarsky remarked that a proper rate proceeding would take all factors into account, including the public benefits provided by radio broadcasters.
• Note: Rep. Issa’s question period time expired here.

Rep. Sheila Jackson Lee (D-TX):

• Rep. Jackson Lee asked Ms. Estefan to discuss how the absence of a performance right for terrestrial radio airplay impacted artists with older hits differently than artists with hits currently in the top 40 charts.
  • Ms. Estefan noted how artists and their heirs would not receive any compensation for their music being played on terrestrial radio. She stated that these musicians and their heirs deserved to financially benefit from their works.
• Rep. Jackson Lee then asked Mr. Massarsky to indicate how often sound recordings were in play for which no compensation was provided. She also asked Mr. Massarsky to discuss the poverty that many musicians faced.
  • Mr. Massarsky mentioned how terrestrial radio stations generally played 12 songs per hour and indicated that music represented two-thirds of terrestrial radio programming. He called it unfortunate that individuals that were just music performers could not derive compensation for this terrestrial radio airplay. He noted how other countries had developed license fees and performance royalty rates that accounted for artists that were heavily financially dependent on performance rights. He stated that the terrestrial radio stations in these other countries were able to accommodate and afford these fees and royalties and indicated the terrestrial radio markets in these countries had continued to grow.
• Rep. Jackson Lee noted how commercial and public terrestrial radio stations that made less than $100,000 annually would pay $10 in performance royalties under the American Music Fairness Act, public terrestrial radio stations that made between $100,000 and $1.5 million annually would pay $100 in performance royalties under the American Music Fairness Act, and commercial terrestrial radio stations that made between $100,000 and $1.5 million annually would pay $500 in performance royalties under the American Music Fairness Act. She also expressed interest in working to ensure that minority-owned terrestrial radio stations remained economically viable and highlighted the important role that these stations played in minority communities.

Rep. Mike Johnson (R-LA):

• Rep. Johnson remarked that policymakers needed to balance the IP rights of musicians with the need to ensure terrestrial radio’s survival when considering a performance right for musicians for terrestrial radio airplay. He mentioned how he had worked as a radio talk show host prior to entering Congress and noted how terrestrial radio stations operated under tight margins. He also discussed how his Congressional District was prone to natural disasters and highlighted the important role that local terrestrial radio stations played in supporting natural disaster response capabilities. He asked Mr. LeGeyt to elaborate on how the passage of the American Music Fairness Act might impact emergency radio broadcasting.
  • Mr. LeGeyt remarked that the American Music Fairness Act would result in “substantial” fees for broadcasters and would cause terrestrial radio broadcasters to reduce their reinvestments in the services that they provided to their local communities. He stated that these reduced reinvestments would render these broadcasters less equipped to provide news and emergency alerts to their communities during periods of emergency. He then disputed the characterization of the debate surrounding the American Music Fairness Act. He noted how terrestrial broadcasters already paid for the music that they played over the air and indicated that this money went to songwriters and publishers. He expressed his willingness to work on reforms that would ensure that musicians could make a living. He stated however that the U.S. should not simply impose a single fee on a new segment of the broadcast radio industry. He raised concerns that such a fee would undermine emergency services.
• Rep. Johnson emphasized the importance that broadcast radio played during emergency situations in which the power went out.

Rep. Steve Cohen (D-TN):

• Rep. Cohen mentioned how he was a co-sponsor of the American Music Fairness Act. He asked Mr. Mitchell to discuss how music producers and engineers contributed to the music making process.
  • Mr. Mitchell discussed how music producers played a key role in choosing the musicians that played a given song.
• Rep. Cohen then noted how performing artists were already compensated when their works were played on the internet and on satellite radio. He asked Mr. Mitchell to discuss how providing music artists with a performance right for the terrestrial radio airplay of their works would impact music artists.
  • Mr. Mitchell noted that creating a performance right for the terrestrial radio airplay of recorded works would create a new revenue stream for music artists. He remarked that this new revenue stream would be significant to non-featured artists on songs, such as background singers and musicians. He stated that these non-featured artists did not benefit from terrestrial radio’s promotion of their recorded works. He also highlighted how musicians in other countries were compensated for terrestrial radio performances of their works while U.S. musicians were not compensated for such performances of their works. He called this situation unfair.
• Rep. Cohen then asked Mr. Pomeroy to explain why songwriters were compensated when their works were performed on terrestrial radio while performing artists were not compensated when their works were performed on terrestrial radio.
  • Mr. Pomeroy stated that performing artists had historically not possessed the negotiating leverage needed to obtain performance royalties for the terrestrial radio airplay of their works. He indicated that the U.S. was unique in its lack of a terrestrial radio performance right for performing artists. He remarked that the U.S.’s establishment of a performance royalty for terrestrial radio airplay would help the U.S. to remain a leading producer of music.

Rep. Andy Biggs (R-AZ):

• Rep. Biggs noted how streaming services, satellite radio, and terrestrial radio stations outside of the U.S. currently paid performance royalties to artists. He asked Mr. LeGeyt to address how these services were able to afford to pay performance royalties to artists.
  • Mr. LeGeyt asserted streaming services and satellite radio were fundamentally different from terrestrial radio. He stated that terrestrial radio was hyper local and completely free, which meant that it had very different economics as compared to streaming services and satellite radio.
• Rep. Biggs also noted how Mr. LeGeyt had testified that the NAB had engaged in negotiations with the music industry for 18 months to develop a performance right for terrestrial radio airplay. He asked Mr. LeGeyt to indicate how the NAB had proposed to address the issue of performance rights for terrestrial radio airplay.
  • Mr. LeGeyt testified that the NAB’s negotiations with the music industry to develop a performance right for terrestrial radio airplay were centered on frameworks. He indicated that the discussions of specific numbers during these negotiations were covered under a non-disclosure agreement (NDA). He remarked that the broadcast industry wanted there to exist incentives for broadcasters to invest and innovate in their stations through providing streamed simulcasts of their broadcasts and providing compensation for the airplay of recorded works. He stated that taking these actions would result in both more airplay and higher royalties overall.
• Rep. Biggs interjected to ask Mr. LeGeyt to clarify whether the NAB’s proposal included providing royalties to performers.
  • Mr. LeGeyt answered affirmatively.
• Rep. Biggs expressed interest in further examining the NAB’s proposals to address the issue of performance rights for terrestrial radio airplay if possible. He then asked Mr. Mitchell to indicate whether the playing of the song “Uptown Funk” on broadcast radio had contributed to the song’s commercial success.
  • Mr. Mitchell answered affirmatively.
• Rep. Biggs mentioned how many musicians that he knew wanted their songs played on broadcast radio in order to generate publicity and sales. He asked Ms. Estefan to indicate whether the relationship between broadcast radio and performing artists was mutually beneficial.
  • Ms. Estefan remarked that broadcast radio had been “instrumental” in promoting music and driving music sales. She stated however that music sales were becoming increasingly less common and noted how most consumers now listened to music via streaming. She stated that this dynamic had reduced the promotional benefits of broadcast radio. She added that the current inability of musicians to tour had further reduced the promotional benefits of broadcast radio.

Rep. Hank Johnson (D-GA):

• Rep. Johnson asked Mr. LeGeyt to elaborate on his testimony’s assertion that the American Music Fairness Act would upend established business relationships under copyright laws.
  • Mr. LeGeyt remarked that the broadcasting industry had built its business model based on the current music licensing regime, which had been in exitance for 100 years. He noted how Congress had historically updated the U.S.’s copyright laws in order to account for new technologies. He stated that changing the U.S.’s copyright laws pertaining to performance rights for terrestrial radio airplay would disrupt a legacy industry and its relationship with the music industry. He highlighted how broadcast radio provided promotion to music artists and drove the streaming of their works. He raised concerns that imposing a performance royalty on broadcast radio stations would have broader impacts on the current business arrangements of these stations.
• Rep. Johnson asked Mr. LeGeyt to address how music artists ought to be compensated for their work that is played on broadcast radio.
  • Mr. LeGeyt remarked that the best way that radio broadcasters could provide value to music artists would be through a music licensing system that incentivized broadcasters to innovate. He stated that this could be accomplished through a more holistic discussion surrounding U.S. royalty laws and expressed the NAB’s openness to such a discussion. He claimed that the music industry was rebuffing efforts to have such a discussion with the radio industry.
• Rep. Johnson then mentioned how the American Music Fairness Act included provisions that would impose lower performance royalty rates on commercial and public broadcast stations that generated smaller amounts of revenue. He asked Mr. LeGeyt to explain why these low royalty rates (which could range between $10 and $500) were so oppressive to broadcast stations.
  • Mr. LeGeyt noted how many small radio stations only had one or two employees and commented that these stations were small businesses. He contended that a new $500 fee for performance royalties would be significant and emphasized that this new charge would be in addition to their existing fees. He also stated that small radio stations could not offset these new fees through charging a subscription and noted the free nature of broadcast radio. He then emphasized how there were 4,000 radio stations that would not qualify for the American Music Fairness Act’s lower performance royalty rates, despite the fact that many of these stations were very small. He indicated that a radio station’s performance royalty obligations under the American Music Fairness Act could total hundreds of thousands of dollars, which would impose burdens on these stations.
• Rep. Johnson asked Mr. Massarsky to address whether the American Music Fairness Act accounted for concerns that small broadcast radio stations could not afford to adequately compensate musicians for the performances of their sound recordings.
  • Mr. Massarsky remarked that the American Music Fairness Act provided sufficient protections to small radio stations.

Rep. Tom McClintock (R-CA):

• Rep. McClintock remarked that the issue of performance rights for terrestrial radio airplay was fundamentally about property rights. He elaborated that the broadcaster and the owner of a sound recording’s rights ought to determine amongst themselves the conditions and compensation for the use of a sound recording. He stated that the U.S. government’s responsibility was to ensure that voluntary IP agreements were being adhered to. He then posited a hypothetical scenario in which a broadcast radio station recorded a broadcast television talk show and then played it on the broadcast radio station. He asked Mr. LeGeyt to indicate whether the broadcast television station that owned the talk show in this hypothetical scenario would object to the radio station’s playing of the talk show.
  • Mr. LeGeyt answered affirmatively.
• Rep. McClintock asserted that the hypothetical scenario he had posited regarding a talk show recording was directly applicable to the playing of other recorded works (including music) on broadcast radio.
  • Mr. LeGeyt remarked that the U.S. would likely have a very different music licensing regime if the U.S. were to establish a brand new music licensing regime today. He stated that broadcasters had long been paying royalties to the owners of sound recordings based on a 1919 law. He indicated that this law directed broadcasters to pay songwriters for the performances of their recorded works.
• Rep. McClintock interjected to comment that the length of time that this approach had been in effect did not mean that the approach was necessarily correct. He then referred to the American Music Fairness Act as a “half measure” and stated that the legislation did not provide compensation for the broadcast radio airplay of a sound recording at a rate that was agreeable to both the recording’s owner and user. He noted that a hit song by a well-known artist was likely to be worth more than a new song by an unknown artist. He commented that the new artist might want to not charge for the broadcast radio airplay of their music so that they could generate publicity for their music. He asked Mr. Massarsky to address whether the owners and the users of recorded works should be able to make custom arrangements regarding the uses of copyrighted works.
  • Mr. Massarsky remarked that the owners and users of recorded works could develop custom arrangements for using copyrighted works and suggested that the U.S. Copyright Royalty Board (CRB) could serve as a mechanism for developing such arrangements. He mentioned how there existed numerous copyright rate setting and adjudicating bodies throughout the world and commented that these various bodies demonstrated the feasibility of such arrangements.
• Rep. McClintock remarked that the performing rights of musicians could be protected and enforced and stated that the U.S. simply chose not to protect and enforce these rights. He expressed concerns that the American Music Fairness Act assigned an arbitrary license fee without the consent of a recorded work’s owners. He asked Mr. Massarsky to indicate why Congress could not simply protect the performing rights of musicians.
  • Mr. Massarsky expressed agreement with Rep. McClintock’s call for the U.S. to protect the preforming rights of musicians.

Rep. David Cicilline (D-RI):

• Rep. Cicilline remarked that the challenges faced by both radio broadcasters and music artists were the result of the harmful behavior of giant companies. He elaborated that large technology companies created significant challenges for radio broadcasters while large music studios created significant challenges for music artists. He expressed his hope that the Committee would soon mark-up the Journalism Competition and Preservation Act of 2021, which he commented would provide relief to local broadcasters. He then called it unfair to shift the burden of ensuring that local broadcasters remained economically viable to music artists. He asked Mr. LeGeyt to respond to this view. He also asked Mr. LeGeyt to address how many broadcasters would actually benefit from the American Music Fairness Act’s proposed lower performance royalty rates for smaller broadcasters.
  • Mr. LeGeyt first remarked that local broadcasters could afford to pay copyright holders a certain amount for the use of the works of the copyright holders. He stated that broadcasters were not opposed to having performing artists obtain a larger portion of this amount and called for a “holistic conversation” on reforming how this money was paid out. He raised concerns that the American Music Fairness Act was too narrowly focused on terrestrial radio performance royalties and commented that changes to this royalty system would impact long established business models. He then remarked that the American Music Fairness Act’s exemptions for smaller radio broadcasters would leave out a “huge swath” of the broadcast radio industry. He testified that there were 177 radio groups that owned stations that would fall outside of these exemptions.

Rep. Tom Tiffany (R-WI):

• Rep. Tiffany asked Mr. LeGeyt to address why the U.S. was failing to protect the property rights of music artists through failing to compensate these artists for the terrestrial radio airplay of their works.
  • Mr. LeGeyt noted that the NAB represented both content owners and content users. He discussed how the issue of performance rights for terrestrial radio airplay involved a set of property rights that were developed over 100 years ago and noted how both the radio and music industries had developed their business models around these property rights. He asserted that the American Music Fairness Act would upend this longstanding approach and impose new costs on broadcasters. He expressed the NAB’s interest in pursuing comprehensive reforms to the U.S.’s royalty system that would provide more compensation to music artists.
• Rep. Tiffany then asked Mr. Pomeroy to discuss how the various shutdowns stemming from the COVID-19 pandemic had adversely impacted musicians.
  • Mr. Pomeroy mentioned how his hometown of Nashville, Tennessee had experienced an exodus of musicians and workers as a result of the pandemic. He emphasized that music artists currently received no compensation for the terrestrial airplay of their sound recordings. He stated that musicians were currently facing significant economic hardships due to their inability to tour and perform live. He remarked that the failure to provide a performance royalty for terrestrial radio airplay would further contribute to the economic hardships faced by musicians and reduce the U.S. production of music.
• Rep. Tiffany then expressed concerns that the royalty fee imposed under the American Music Fairness Act could grow overtime. He lastly expressed frustration with the Committee for holding the hearing virtually.

Rep. Ted Deutch (D-FL):

• Rep. Deutch remarked that the U.S.’s lack of a performance right for terrestrial radio airplay was unfair and asserted that that the U.S.’s music royalty system ought to be reformed to provide such a right. He emphasized how the American Music Fairness Act would provide smaller broadcast radio stations with lower royalty rates. He mentioned how 80 percent of U.S. broadcast radio stations under the legislation would pay $500 or less to play all of the music that they wanted. He then noted how Mr. LeGeyt had repeatedly asserted that broadcast radio was free. He asked Mr. LeGeyt to indicate how much advertising revenue radio broadcasters had received in the previous year.
  • Mr. LeGeyt referred to advertisers as the “cornerstone” of the broadcast radio business. He stated that the COVID-19 pandemic had adversely impacted advertising revenue for broadcast radio stations. He expressed his willingness to follow up with Rep. Deutch’s inquiry on the total amount of advertising revenue that radio broadcasters had received in the previous year.
• Rep. Deutch noted how Mr. LeGeyt had asserted that the American Music Fairness Act would result in less investment in the emergency alert system, less reporting, and less innovation. He asked Mr. LeGeyt to indicate whether large radio broadcasters (such as iHeartMedia and Cumulus Media) would stop making investments in emergency alert systems, reporting, and innovation if the American Music Fairness Act were to become law.
  • Mr. LeGeyt remarked that the enactment of the American Music Fairness Act would not stop broadcast radio companies from making investments in emergency alert systems, reporting, and innovation. He contended however that the enactment of the legislation would reduce these investments.
• Rep. Deutch also noted how Mr. LeGeyt had asserted that the American Music Fairness Act would have a “dramatic” impact on music airplay on broadcast radio stations. He asked Mr. LeGeyt to indicate whether broadcast radio stations would stop playing music if the legislation were to be passed into law.
  • Mr. LeGeyt remarked that the American Music Fairness Act would not lead broadcast radio stations to stop playing music.
• Rep. Deutch then noted how broadcast radio stations already compensated music artists for the streaming of their works. He expressed confusion as to why broadcast radio stations could afford to pay music artists for the streaming of their works and could not afford to pay music artists for the terrestrial radio airplay of their works. He then asked Mr. LeGeyt to indicate whether it was burdensome for broadcasters to pay disc jockeys (DJs) to play music.
  • Mr. LeGeyt stated that paying DJs to play music was a cost of doing business for broadcast radio stations.
• Rep. Deutch remarked that musicians were the only people not being paid by broadcast radio stations and stated that the American Music Fairness Act would address this issue.

Rep. Thomas Massie (R-KY):

• Rep. Massie mentioned how Section 5 of the American Music Fairness Act states that if a copyright holder directly contracts with broadcast stations to license terrestrial performance rights, then the broadcast station must still pay 50 percent of the direct license payment to the entity administering the royalty. He asked Mr. LeGeyt to indicate whether the American Music Fairness Act would enable music performers to elect to have their recorded works played on terrestrial radio without compensation. He commented that music performers might elect to not receive compensation for terrestrial radio airplay in order to better promote their live appearances.
  • Mr. LeGeyt remarked that the licensing under the American Music Fairness Act would be compulsory for music performers. He stated that it would be “extremely cumbersome” to develop bespoke performance rights agreements between the thousands of U.S. broadcast radio stations and the thousands of U.S. copyright holders. He stated that the legislation did intend to permit a local station group to directly negotiate with copyright holders in order to develop custom arrangements.
• Rep. Massie remarked that music performers should have the right to forgo compensation for the terrestrial radio airplay of their works. He then mentioned how Ms. Estefan had stated that music artists and their heirs ought to enjoy performance royalties for a long period of time. He noted how the term of copyright protection began at the time of a work’s creation and lasted for the life of the author plus 70 years. He asked Ms. Estefan to indicate whether the current length of a copyright’s term was appropriate.
  • Ms. Estefan remarked that the current length of a copyright’s term ensured that her posterity would receive compensation for her work after she died. She noted however that her posterity would only receive compensation for her work as a songwriter under the U.S.’s current copyright system.
• Rep. Massie asked Ms. Estefan to indicate what would constitute an appropriate term for royalties for both a creator and the creator’s heirs.
  • Ms. Estefan remarked that the U.S. had a system of copyright laws that established the amount of time that a given work could generate a royalty for the creator and their heirs.
• Rep. Massie noted how patents under the U.S. patent system only lasted 20 years. He stated however that royalties for songs lasted the length of the author’s life plus 70 years. He commented that this treatment of songs and inventions was fundamentally unequal.
• Note: Rep. Massie’s question period time expired here.

Rep. Karen Bass (D-CA):

• Rep. Bass asked Mr. LeGeyt to discuss how broadcasters were navigating the challenges associated with their royalty fee obligations. She expressed particular interest in how small minority broadcasters were navigating these challenges.
  • Mr. LeGeyt testified that broadcasters were paying hundreds of millions of dollars in fees to an increasing number of performing rights organizations (PROs) and called this situation “extremely challenging.” He also noted how broadcasters were subject to additional fees when they engaged in webcasting. He further mentioned how broadcasters still needed to pay their U.S. Federal Communications Commission (FCC) licensing fees and vendors for technology services. He asserted that this myriad of fees was “extremely cumbersome” for smaller broadcasters.
• Rep. Bass asked Mr. LeGeyt to clarify how he would define what constitutes a small broadcaster.
  • Mr. LeGeyt remarked that he would define the term “small” in the context of broadcasting by the level of community focus. He stated that these small broadcasters could still have scale in order to compete with large technology companies for advertising revenue.
• Rep. Bass then asked Ms. Estefan to discuss how the U.S.’s current lack of a performance right for terrestrial radio airplay impacted the music marketplace and the broader economy.
  • Ms. Estefan mentioned how the U.S.’s lack of a performance right for terrestrial radio airplay meant that U.S. artists could not receive performance royalties derived from abroad, which meant that the U.S. was missing out on a taxable income stream. She also noted how providing a performance right for terrestrial radio airplay would create taxable income for U.S. musicians. She remarked that both songwriters and performing artists ought to be compensated for the terrestrial radio airplay of their recorded works. She further emphasized how the American Music Fairness Act included reduced royalty rates for smaller broadcast radio stations.
• Rep. Bass lastly asked Mr. Mitchell to discuss how the U.S.’s current lack of a performance right for terrestrial radio airplay impacted individual artists.
  • Mr. Mitchell remarked that music artists had faced challenges prior to the COVID-19 pandemic and specifically noted how the 2008 Financial Crisis and the advent of MP3s had adversely impacted record sales. He contended that a performance right for terrestrial radio airplay would help artists to weather financial uncertainty. He stated that musicians functioned as small businesses and commented that musicians were currently struggling financially.

Rep. Cliff Bentz (R-OR):

• Rep. Bentz mentioned how the smaller broadcast stations within his Congressional District were experiencing an increasing competition from multiple platforms. He asked Mr. LeGeyt to indicate whether broadcast radio possessed any form of a competitive advantage that enabled it to drive down the cost of streaming for artists.
  • Mr. LeGeyt remarked that broadcast radio would remain a viable model so long as it focused on local markets and served demographics that could not afford other forms of media with subscription fees. He stated that broadcast radio’s ability to reach these demographics made it uniquely valuable to the music industry.
• Rep. Bentz asked Mr. LeGeyt to indicate whether broadcast radio provided competition for streaming and to indicate whether any such competition drove down the cost of streaming for artists.
  • Mr. LeGeyt remarked that broadcast radio was competing with other audio streaming services for listenership. He also stated that broadcast radio was driving downloads for on-demand streaming services, which he commented was beneficial for artists. He compared broadcast radio’s current role in driving music downloads for artists to broadcast radio’s historic role in driving album sales for artists.

Rep. Hakeem Jeffries (D-NY):

• Rep. Jeffries discussed how music producers and engineers did not receive compensation for the terrestrial radio airplay of their music. He asked Mr. Mitchell to indicate whether providing music producers and engineers with compensation for the terrestrial radio airplay of their music would be very beneficial for these producers and engineers.
  • Mr. Mitchell answered affirmatively. He noted how performance royalties were being collected on music played on terrestrial radio around the world. He indicated that these performance royalties were not being remitted to U.S. artists because the U.S. did not maintain its own performance rights system for terrestrial radio airplay. He stated that it would be very beneficial for music producers, engineers, and other musicians to receive performance royalties for the terrestrial radio airplay of their works.
• Rep. Jeffries remarked that the Committee must work to balance the interests and needs of musicians and broadcasters focused on underserved communities. He expressed his optimism that the Committee could accomplish such balancing and referenced the Committee’s successful work to pass the Music Modernization Act.

Rep. Pramila Jayapal (D-WA):

• Rep. Jayapal noted how music artists that relied upon live performances for income had experienced significant economic hardship during the COVID-19 pandemic. She mentioned that large broadcast radio conglomerates had made millions of dollars through playing the recorded works of music artists during the pandemic. She stated that music artists received “miniscule profits” from the online streaming of their music. She asked Mr. Mitchell to discuss the importance of enabling music artists to receive performance royalties for the terrestrial airplay of their music.
  • Mr. Mitchell remarked that recorded music involved a performance and should therefore be treated the same as concerts. He elaborated that music artists were compensated for concert performances and asserted that music artists must also be compensated for the terrestrial radio airplay of their recorded music. He remarked that providing compensation for the terrestrial radio airplay of music would be especially beneficial to background musicians, background singers, and music producers. He stated that music was a major export of the U.S. and contended that the U.S. needed to better recognize its music performers.
• Rep. Jayapal then mentioned how the Seattle-Tacoma area constituted the U.S.’s twelfth largest metropolitan market for radio and had over 30 broadcast radio stations. She noted how these stations were of all sizes and of all ownership types. She stated that these stations played key roles in publicizing up-and-coming music artists and possessed very different revenue streams. She asked Mr. Pomeroy to elaborate on the contrast in revenue streams between large media conglomerate broadcast radio stations and smaller broadcast radio stations.
  • Mr. Pomeroy remarked that large media conglomerate broadcast radio stations and small broadcast radio stations were fundamentally different. He acknowledged that while broadcast radio stations played key roles during periods of emergency, he called it unfair that these broadcast radio stations were deriving value from the airplay of recorded works without compensating the performing artists of such works.
• Rep. Jayapal then mentioned how Lotus Communications had recently acquired three local Seattle broadcast radio stations. She asked Mr. Pomeroy to address how the American Music Fairness Act would impact the fees imposed on smaller broadcast radio stations relative to the fees imposed on larger broadcast radio stations.
  • Mr. Pomeroy remarked that the American Music Fairness Act included provisions (including a sliding scale of fees) to ensure that it did not unduly burden small broadcast radio stations.

Rep. Jamie Raskin (D-MD):

• Rep. Raskin remarked that music artists ought to be compensated for the airplay of their recorded works on terrestrial radio. He noted how SoundExchange had estimated that the failure of broadcast radio to pay performance royalties for sound recordings had cost artists and rights owners around $200 million annually. He asked Ms. Estefan to discuss how an additional $200 million in annual performance royalties would impact both well-known and new artists.
  • Ms. Estefan noted that the total amount of royalties that an artist would receive for terrestrial radio airplay would depend on how many times their songs were played. She indicated that the American Music Fairness Act would have a body determine fair royalty rates and that the legislation would provide lower royalty rates for smaller radio stations. She then noted that the aforementioned $200 million figure only referred to performance royalties generated outside of the U.S. by U.S. artists. She discussed how the Music Modernization Act had provided artists with performance royalties for the streaming of their songs (albeit very low royalties) and contended that Congress ought to extend performance rights to terrestrial radio airplay.
• Rep. Raskin asked Mr. Massarsky to estimate the amount of money from both domestic and foreign-derived performance royalties that would reach U.S. artists if Congress were to establish a performance right for terrestrial radio airplay.
  • Mr. Massarsky remarked that the total amount of performance royalties paid to U.S. artists would be heavily dependent on future CRB decisions in the event that Congress were to enact a performance right for terrestrial radio airplay. He then discussed how U.S. artists did not receive performance royalties for the terrestrial radio airplay of their music based on the justification that terrestrial radio airplay served as a promotional vehicle for music sales. He asserted that this justification was no longer valid and noted how terrestrial radio stations tended to rely more upon older music that benefited less from promotion.
• Rep. Raskin then asked Mr. Mitchell to indicate whether music artists viewed the lack of a performance right for terrestrial radio airplay as an injustice, an indignity, or an exploitation of their work. He also asked Mr. Mitchell to address whether music artists were working to make the public aware of the U.S.’s current lack of a performance right for terrestrial radio airplay.
  • Mr. Mitchell noted how many artists became aware of the U.S.’s lack of a performance right for terrestrial radio airplay when they worked with foreign artists. He testified that many background musicians on successful songs were experiencing financial challenges and stated that these background musicians should be compensated for the terrestrial radio airplay of their recorded works.

Rep. Val Demings (D-FL):

• Rep. Demings noted how the American Music Fairness Act included a carveout for small radio broadcasters that were not owned by a larger conglomerate. She asked Mr. LeGeyt to indicate whether this carveout would adequately protect smaller radio broadcasters.
  • Mr. LeGeyt remarked that the American Music Fairness Act’s carveout did not adequately protect smaller radio broadcasters. He indicated that over 4,000 U.S. broadcast radio stations would fall outside of the legislation’s exemptions. He stated that while many Committee Members had a “fixation” on the largest broadcast radio companies, he remarked that the three major record labels were significantly bigger than the largest broadcast radio companies. He discussed how 200 broadcast radio station groups across the U.S. would fall outside of the legislation’s exemptions and commented that these broadcast radio stations were not large conglomerates. He then noted how the legislation’s carveouts only applied to broadcast radio stations with very few employees (e.g., one or two employee stations). He stated that a $500 fee would be substantial for these very small broadcast radio stations and commented that imposing these fees on small stations would hamper their ability to create local content.
• Rep. Demings also noted how Mr. LeGeyt had stated that the American Music Fairness Act would jeopardize jobs, force broadcast radio stations to reduce their focuses on their local communities, and threaten the viability of already struggling broadcast radio stations. She asked Mr. LeGeyt to further discuss how the legislation would impact jobs and local communities.
  • Mr. LeGeyt expressed concerns over how the American Music Fairness Act would empower the CRB to set performance royalty rates. He stated that the CRB’s rates for broadcast radio simulcast streaming over the previous 20 years had proven very burdensome and asserted that these rates had hindered the ability of broadcasters to innovate. He remarked that the legislation could result in the imposition of hundreds of thousands of dollars in new royalty fees for local broadcasters that were already facing significant economic challenges. He added that these economic challenges were being compounded due to the reduction in advertising revenues from local businesses stemming from the COVID-19 pandemic.
• Rep. Demings asked Mr. Massarsky to address how the American Music Fairness Act’s carveouts would protect smaller broadcast radio stations.
  • Mr. Massarsky remarked that the American Music Fairness Act’s carveouts would provide complete protection to small broadcast radio stations through capping their fee exposures. He then discussed how the top 20 radio broadcasters would pay the “lion’s share” of performance royalties under the legislation. He also noted how 80 percent of the commercial broadcast radio industry spent two-thirds of their time playing sound recordings. He commented that the broadcast radio industry was making significant use of music without compensating artists. He noted how the U.S.’s current lack of a performance right for terrestrial radio airplay was justified on the basis that terrestrial radio airplay provided artists with promotional value. He stated however that broadcast radio was no longer providing significant promotional value to music artists. He noted how broadcast radio catered to older demographics that listened to older songs (which were less likely to benefit from promotion).

Rep. Scott Fitzgerald (R-WI):

• Rep. Fitzgerald expressed interest in the payment mechanics surrounding foreign-derived royalties for U.S. artists and in learning whether these royalties were paid in a timely manner.
  • Ms. Estefan discussed how she was a member of Broadcast Music, Inc. (BMI) and indicated that this PRO collected and remitted her songwriting royalties. She noted that foreign broadcast radio stations were collecting performance royalties when the recorded works of U.S. artists were played. She indicated that these performance royalties were not being remitted to U.S. artists due to the U.S.’s lack of a reciprocal performance right for terrestrial radio airplay.
• Rep. Fitzgerald asked Ms. Estefan to indicate whether the system for paying songwriting royalties was reliable and prompt.
  • Ms. Estefan answered affirmatively. She noted that songwriters could audit foreign terrestrial radio stations if the songwriters believed that they were being underpaid for the airplay of their recorded works. She testified that her personal experience with PROs had been positive throughout her career.
• Rep. Fitzgerald asked Mr. Mitchell to opine on the payment mechanics surrounding foreign-derived royalties for U.S. artists.
  • Mr. Mitchell mentioned how he had a letter from the president and chief executive officer (CEO) of Phonographic Performance Limited (PPL), which was a PRO based in the United Kingdom (UK). He noted that the letter asserted that it was very feasible to identify and compensate the performers on a sound recording and highlighted that SoundExchange already did this work for various digital services. He further noted how this letter stated that the establishment of a performance right for terrestrial radio airplay would result in a net inflow of money to the U.S. music industry and the U.S. economy.
• Rep. Fitzgerald commented that the letter that Mr. Mitchell referenced suggests that a payment mechanism for foreign-derived royalties for U.S. artists would be very feasible within the performance context.
  • Mr. Pomeroy remarked that the foreign PROs were very professional and were in “disbelief” that the U.S. did not provide a performance right for terrestrial radio airplay. He stated that the establishment of a U.S. performance right for terrestrial radio airplay would benefit both U.S. musicians and the U.S. economy.

Rep. Lou Correa (D-CA):

• Rep. Correa expressed interest in working to develop a resolution to the issue of performance rights for terrestrial radio airplay that could receive support from both the broadcast and music industries. He asked Mr. Pomeroy and Mr. LeGeyt to address why their respective industries were having difficulties in reaching a compromise on the issue.
  • Mr. LeGeyt testified that the NAB had proactively and repeatedly offered to work with the music industry on addressing the issue of performance rights for terrestrial radio airplay. He stated that the music industry had rebuffed the NAB’s various efforts. He expressed interest in having the Committee play a role in restarting conversations between the broadcast and music industries to address the issue of performance rights for terrestrial radio airplay.
  • Mr. Pomeroy remarked that musicians were willing to work with the broadcast industry on the issue of performance rights for terrestrial radio airplay.
  • Mr. Massarsky stated that Mr. LeGeyt’s testimony suggested that preforming artists should receive a portion of the compensation currently being paid out to songwriters for the terrestrial radio airplay of their recorded works. He called this suggestion “completely antithetical” to how the music industry operates in other industrialized countries and asserted that these rights should be considered parallel in nature. He remarked that the U.S. ought to establish a new performance right for the terrestrial radio airplay of recorded works and work to determine appropriate performance royalty rates.
  • Mr. LeGeyt remarked that his focus was ensuring that music artists would actually receive performance royalties for the terrestrial radio airplay of their recorded works. He expressed concerns over how there were many elements of the music industry that took portions of the money generated from music airplay, which reduced the amount of money that artists would receive from airplay.
• Rep. Correa reiterated his call for the broadcast and music industries to work together to develop a resolution to the issue of performance rights for terrestrial radio airplay.
  • Mr. Mitchell remarked that the previous negotiations between the NAB and the music industry involved a business deal and did not involve the development of a new policy. He stated that only Congress could address the issue of performance rights for terrestrial radio airplay.

Rep. Sylvia Garcia (D-TX):

• Rep. Garcia expressed interest in how the American Music Fairness Act would impact Spanish-language and minority-serving broadcast radio stations. She commented that these broadcast stations played central roles in minority communities.
  • Ms. Estefan noted how the American Music Fairness Act included caps on the total performance royalty fees that small broadcast radio stations would have to pay. She acknowledged that while these performance royalty fee rates might be “miniscule” for certain broadcast radio stations, she stated that the legislation was important for establishing that musicians had a right to performance royalties for the terrestrial radio airplay of their sound recordings.
• Rep. Garcia asked Ms. Estefan to indicate whether the American Music Fairness Act provided sufficient protections for small broadcast radio stations.
  • Ms. Estefan answered affirmatively. She also discussed how the performance royalty rate structure was not yet established and explained that judges and consultants would set the performance royalty rates for music. She predicted that the performance royalty rates would not be too expensive under the American Music Fairness Act. She concluded that the legislation would simply enable performing artists to share in the financial success of the terrestrial radio airplay of their recorded works.
• Rep. Garcia emphasized how minorities were underrepresented in broadcast radio station ownership. She asked Ms. Estefan to assure her that the American Music Fairness Act included sufficient protections to not create additional barriers to minority broadcast radio ownership. She also asked Ms. Estefan to assure her that songwriters would continue to be fairly compensated under the legislation.
  • Ms. Estefan noted how songwriters currently received royalties for the airplay of their music on terrestrial radio while performing artists did not currently receive royalties for the airplay of their music on terrestrial airplay. She indicated that the American Music Fairness Act would ensure that performing artists would also receive royalties for the airplay of their music on terrestrial radio.
• Note: Rep. Garcia’s question period time expired here.

Rep. Lucy McBath (D-GA):

• Rep. McBath mentioned how she was a co-sponsor of the American Music Fairness Act and stated that the legislation would ensure that recording artists, singers, and musicians were all paid their “fair share” for the terrestrial radio airplay of their recorded works. She discussed how her state of Georgia was home to many artists that would immediately benefit from the legislation and noted how many of these artists had been unable to tour during the COVID-19 pandemic. She also praised the legislation for protecting small broadcast radio stations (including rural and college radio stations). She then asked Mr. Mitchell to discuss how many individuals it took to make a song.
  • Mr. Mitchell testified that each song he produced typically involved between 15 and 20 people. He indicated that these people included background singers and instrumentalists. He stated that most of the people involved in song production did not tour.
• Rep. McBath reiterated how the pandemic was disrupting live music and music touring. She stated that this disruption underscored the importance of enabling music artists to fully realize the value of their recorded music in order to survive financially. She asked Mr. Mitchell to further discuss how the pandemic had financially impacted music artists.
  • Mr. Mitchell testified that the pandemic had prevented foreign musicians from coming to his music studio, which reduced the amount of available work for his studio’s session musicians. He also stated that the pandemic had adversely impacted the ability of touring musicians to do shows. He further testified that the pandemic had adversely impacted the demand for his music studio, which in turn reduced his income. He remarked that his music studio had not yet fully recovered from the pandemic.
• Rep. McBath asked Mr. Mitchell to indicate how many individuals were involved in the recording of the Bruno Mars song “Uptown Funk” and to indicate whether any of these individuals had received performance royalties for the song’s terrestrial radio airplay.
  • Mr. Mitchell indicated that there were at least 20 individuals involved in recording “Uptown Funk” and that none of these individuals have received performance royalties for the terrestrial radio airplay of that song.

Rep. Madeleine Dean (D-PA):

• Rep. Dean asked Ms. Estefan to discuss the value of the exposure that came from terrestrial radio airplay for performing artists, particularly with regard to older music. She also asked Ms. Estefan to address whether this exposure was sufficient to support background musicians and engineers.
  • Ms. Estefan acknowledged that terrestrial radio had played a “crucial” role in supporting her career. She noted that while background musicians on her songs might have made money through record sales, she indicated that record sales were now a very small part of the music industry. She stated that performers had never been able to derive compensation from the terrestrial radio airplay of their recorded works.
• Rep. Dean then asked Mr. Mitchell to discuss how the establishment of a performance right for terrestrial radio airplay would benefit the artists involved in creating the song “Uptown Funk.”
  • Mr. Mitchell remarked that the performance royalties for “Uptown Funk” generated from terrestrial radio airplay would be “enormous.” He estimated that the provision of performance royalties would provide the background musicians, producers, and engineers involved in the production of “Uptown Funk” with hundreds of thousands of dollars.
• Rep. Dean asked Mr. Mitchell to confirm that there were people and parties that benefited from the recording and sales of “Uptown Funk.”
  • Mr. Mitchell confirmed Rep. Dean’s statement. He noted how the songwriters profited from “Uptown Funk” and that the featured artists profited from the sales of the song.
• Rep. Dean interjected to comment that the broadcast radio stations that played “Uptown Funk” had profited from the song.
  • Mr. Mitchell expressed agreement with Rep. Dean’s comment. He stated that people listened to broadcast radio stations because the stations played music.
• Rep. Dean interjected to indicate that her question period time had expired.

Rep. Greg Stanton (D-AZ):

• Rep. Stanton first provided Mr. Pomeroy with an opportunity to respond to Rep. Dean’s previous question.
  • Mr. Pomeroy mentioned how musicians had to constantly upgrade and purchase new recording gear. He stated that the performance royalties provided under the American Music Fairness Act would enable musicians to better invest in themselves and improve their crafts.
• Rep. Stanton then noted how he often streamed Phoenix-area radio stations when he was in Washington, DC. He noted how terrestrial radio stations were required to pay performance royalties to artists when they simulcasted their broadcasts over the internet. He asked Mr. LeGeyt to indicate whether the enactment of the American Music Fairness Act would subject terrestrial radio stations to a double fee.
  • Mr. LeGeyt answered affirmatively. He acknowledged that the economics underlying the music industry had changed significantly. He stated however that broadcast radio stations were experiencing a great deal of financial pressures and asserted that the imposition of new fees on these stations would undermine the ability of stations to maintain their current levels of local investments.
• Rep. Stanton then expressed interest in how the American Music Fairness Act’s proposed performance royalties would directly benefit artists. He asked Mr. Pomeroy and Mr. Massarsky to indicate the percentage of performance royalties under the legislation that would go to artists (as opposed to record labels and other groups).
  • Mr. Pomeroy discussed how the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund paid out the money provided to SoundExchange. He noted that this Fund paid out 50 percent of its money to music labels and copyright owners, 45 percent of its money to artists and producers, and 5 percent of its money to backing musicians and backing vocalists. He mentioned how this Fund had distributed $62 million last year to music artists. He remarked that this model could serve as the basis for performance royalties for terrestrial radio airplay.
  • Mr. Massarsky remarked that performance royalties would be equally distributed between artists and record labels. He noted how SoundExchange, other jurisdictions, and PROs were already fairly distributing performance royalties between artists and record labels.
• Rep. Stanton then asked Mr. LeGeyt to address how broadcast radio stations would respond to the additional expenses associated with providing performance royalties for terrestrial radio airplay.
  • Mr. LeGeyt remarked that requiring broadcast stations to pay performance royalties for terrestrial radio airplay would undermine their ability to provide local services. He stated that the broadcast radio industry remained one of the most competitive and dispersed industries in media and raised concerns that performance royalty requirements could drive broadcast radio station consolidation. He noted how broadcast radio stations were already competing with large technology companies for advertising revenue.