We reported yesterday that the House Judiciary Committee was preparing to mark up HR 848, the Performance Rights Act that would require over-the-air broadcasters to pay for the right to perform sound recordings. The Committee has now passed the bill by a 21-8 margin. However, by all indications, things will be a lot closer — if not an outright defeat for HR 848 — when it gets to the House floor.
The Judiciary Committee also took up action that will allow even more webcasters to reach agreements with SoundExchange, Inc. regarding the royalties paid to perform sound recordings via the Internet through 2015.
As Judiciary Committee Chair John Conyers is also the sponsor of HR 848, the outcome of this vote was never really in doubt. But even as a watered down version was working its way out of the Judiciary Committee, more Representatives were jumping in to block the legislation. By the time the Committee voted, 192 Representatives were official co-sponsors of the Local Radio Freedom Act (H Con. Res 49). Just 26 more are needed for this opposition movement to become the necessary majority to defeat HR 848.
Sensing that his chances are slipping away, Chairman Conyers amended HR 848 prior to the Committee vote to reduce the impact on small broadcasters. The major amendments are:
- Creation of a multi-tiered flat fee paid by qualifying "Minority, Female, Religious, Rural, Small, Noncommercial, Public, Educational and Community Stations and Certain Uses" which actually have nothing to do with these designations everything to do with gross revenues:
- For any station that qualifies as a "public broadcasting entity" under the Copyright Act:
- A station with less than $ 100,000 in gross annual revenues must pay annual royalties of $ 500.00
- A station with at least $ 100,000 in gross revenues must pay annual royalties of $ 1000.00
- A station with less than $ 100,000 in gross annual revenues must pay annual royalties of $ 500.00
- For any other stations:
- A station with less than $ 100,000 in gross annual revenues must pay annual royalties of $ 500.00
- A station with at least $ 100,000 but less than $ 500,000 in gross revenues must pay annual royalties of $ 2500.00
- A station with at least $ 500,000 but less than $ 1.25 million in gross revenues must pay annual royalties of $ 5000.00.
- A station with at least $ 1.25 million in gross revenues will pay according to the results of any eventual Copyright Royalty Board ratemaking proceeding.
- A station with less than $ 100,000 in gross annual revenues must pay annual royalties of $ 500.00
- For any station that qualifies as a "public broadcasting entity" under the Copyright Act:
- The station’s payment requirement becomes effective on a delayed basis, according to the total gross revenues achieved by the station during the previous four calendar quarters:
- A station with less than $ 5,000,000 over the previous four calendar quarters will not have to pay a performance royalty for the three years following enactment of this law
- A station with less than $ 5,000,000 over the previous four calendar quarters will not have to pay a performance royalty for the first year following enactment of this law
- A station with less than $ 5,000,000 over the previous four calendar quarters will not have to pay a performance royalty for the three years following enactment of this law
Of course, even most small broadcasters will still fall into the highest payment bracket. We’ve had conversations with broadcasters large and small and every one of them says, without fail, that adding a $ 5,000 annual expense would be difficult to endure. We doubt that having 3 years to prepare for such payments would ease the pain.
That may not be a problem, though, as it’s hard to believe these amendments will move the co-sponsors of the Local Radio Freedom Act. H. Con Res. 49 is a rather unqualified statement against any performance right:
Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings.
Meanwhile, the Judiciary Committee also passed HR 2334, a bill only recently introduced by Chairman Conyers. HR 2334 creates a 30 day window in which webcasters and SoundExchange can continue to negotiate alternative royalty rates for performance of sound recordings via the Internet to those which were adopted by the Copyright Royalty Board in March 2007 and those which are being considered in a current proceeding applicable to the years 2011-2015. Because the NAB and several noncommercial webcasters have already reached distinct agreements with SoundExchange, HR 2334 primarily works to the benefit of larger, web-only music programmers.
