Internet Killed the Radio Star: Preventing Digital Broadcasters from Exploiting the Radio Music License Committee Rate to the Detriment of Songwriters

– Alexander Reed Speer

The current business model of music broadcasting is built upon agreements that permit broadcasters to play songs in exchange for paying the artist royalties or an annual fee that is negotiated by the Radio Music Licensing Company. This model does not provide adequate compensation to songwriters who rely primarily on public performance royalties for revenue. Because terrestrial broadcasters who also operate webcasts pay lower rates to Performing Rights Organizations (PROs), Pandora attempted to purchase a single AM/FM terrestrial radio station in order to obtain this lower rate, essentially exploiting the regulatory framework. Congress should set a clear legal standard by either entitling a digital broadcaster who purchases a terrestrial station to the lower rate only with a showing of good faith or allowing web-based broadcasters to lower their PRO licensing fees in proportion to the percent of their audience that listens to the acquired AM/FM terrestrial stations. The Music Modernization Act is making headlines in 2018 as a bill that proposes to improve the means and process by which performance royalty rates are set by PROs and ultimately awarded to artists. Today, the use of internet radio continues to increase while the use of terrestrial radio is on the decline, making the resolution of this issue important to foster competition in the music industry and to ensure fair compensation is awarded to artists.

Abstract Written by Noel Couch – 2018