The Government Accountability Office today released a report analyzing the effect of pending legislation that would require broadcasters to pay royalties to musicians and record companies for music played on radio stations.
If the proposed Performance Rights Act were to pass, most artists wouldn’t make more than a few hundred extra dollars in royalties a year. But the most-played song during the time of the study, “Bad Romance" by Lady Gaga, would have garnered over $446,000 in royalties.
Under current law, AM and FM radio stations can play music without paying a royalty to the copyright holder (usually the record company), performers, and musicians. They do however have to pay royalties to the songwriter or composer. Satellite, Internet and cable radio must pay both kinds of royalties.
The bill would impose a performance royalty on radio stations. The amount would vary according to the station’s gross annual revenues and status as commercial or noncommercial.
Radio station owners who oppose the legislation argue it’s appropriate that artists don’t receive royalties because exposure via radio play helps sell albums.
However, the GAO in its 69-page report “found the relationship between radio airplay and sales to be unclear. The presence of other promotional outlets, such as the Internet and special events, and growth of music piracy create a more nuanced environment wherein the relationship between airplay and music sales is less clear than in the past.”
Overall, the GAO estimated that every 1% point of royalty based on station revenue would cost the broadcast radio industry $101 million per year. As for artists, if the rate was 2.35%, GAO estimated that 56 % of performers would receive $100 or less per year, and fewer than 6 % of performers would receive $10,000 or more per year in royalties from airplay in the top 10 markets.
Of the royalties, 50% would be paid to the copyright holder, 45 % would be paid to the featured performer or musician, 2.5 % would be paid to background musicians, and 2.5 % would be paid to background performers and vocalists.
In Lady Gaga’s case, that would work out to $201,000 for Lady Gaga herself, while her record company would earn 50 percent, or over $223,000. The background musicians and performers would share 5 percent, over $22,000.
The bill is currently pending in both the House, where it is sponsored by Rep. John Conyers (D - Mich), and in the Senate, where it was introduced by Sen. Patrick Leahy (D - Vt.)