Music industry advocates have had their plates full this year with the issues of ticketing reform and AI regulation. Yet buried under these proposed laws and arguably just as pressing is the American Music Fairness Act (H.R.791), a bill that would finally mandate performing artists be paid when their songs are played on terrestrial radio.
As readers of Billboard may know from previous coverage, the United States remains one of the only countries in the world — joined by North Korea, Iran, Rwanda and China — that does not have a complete public performance right for sound recordings. But despite a concerted effort this cycle from high-profile advocates including Randy Travis and Gloria Estefan, all signs point to the AMFA expiring on Jan. 3, 2025, when the next congressional session begins.
The AMFA is only the latest iteration of dozens of prior failed bills proposed to close terrestrial radio’s unique royalty carveout. Given that nearly everyone aside from terrestrial radio corporations, including the government’s own Copyright Office, agrees that performing artists should be compensated when their voice plays over the radio, why has Congress still not acted? The decades-long strength of the promotion-for-play argument is the chief reason, and its history offers the key to undoing the harmful status quo.
For a century, radio stations have argued that performing artists are sufficiently compensated by the free publicity they receive from airtime — enough to forgo a performance royalty. And indeed, the practices of payola and independent promotion that emerged during the post-war radio boom demonstrated how desperately the recording industry needed the radio for promotion. To understand how these 20th-century practices became legally entrenched — now preventing 21st-century artists from getting paid — let’s go back to the beginning.
Payola is a contraction of “pay” and “Victrola” from the time when Tin Pan Alley publishers employed song pluggers to travel the country in the late 1800s, promoting sheet music with gifts, money and even prostitutes. The pay-for-play practice flourished for around 60 years until a series of scandals at the start of the 1960s sparked public outrage over the revelation that radio DJs were making programming choices based on bribes. After a series of high-profile hearings, Congress began requiring radio stations to publicly disclose when they receive compensation for broadcasting choices.
Yet by prohibiting undisclosed payments made to influence programming, lawmakers left a large legal loophole open: So long as payments are disclosed, they are legal. In the place of open bribery, the more sophisticated system of independent radio promotion was born. Record labels began hiring third-party “indie promoters” to give large sums of money to radio stations, financing their ticket giveaways, events and contests in return for influence on programmers’ playlists. By representing the label and/or radio stations, successful indie promoters became the music industry’s most powerful gatekeepers. Without any internal competition, they began charging labels over $100,000 per song they managed to get added into a station’s regular rotation.
The astronomical price that labels were paying to get songs on the radio was an open secret that undermined the 20th-century fight for a full public performance right. As early as the 1930s and ‘40s, multiple bills were introduced in the House to include sound recordings under the copyright regime. Yet terrestrial broadcasters presented a powerful opposition: If labels were spending millions to get airtime for their records, why should radio pay performers a royalty? In 1978, broadcasters testified to Congress that record labels’ giveaways to stations and “large staffs of promotion people” were evidence that radio was not exploiting artists. Unfortunately for today’s advocates, their argument prevailed and became the status quo from the ’70s through the ’90s.
However, the digital revolution at the turn of the 21st century upended the music industry. Threatened by the rise of music sharing on the Internet, Congress amended copyright law in 1995 to grant the right of public performance via “digital audio transmissions” to copyright owners of sound recordings — a narrow “digital” phrasing that intentionally grandfathered the promotion-for-play argument into the law. Influenced by the powerful terrestrial radio lobby, the Senate refused to upend the supposedly “mutually beneficial relationship” between performers and radio. By maintaining terrestrial radio’s carveout, the current law disadvantages all digital broadcasting platforms, which do pay performance royalties.
Not long after this exception was codified, the tide began to turn against independent promotion, throwing into question the very system that supposedly justified it. After a 2005 payola investigation by New York Attorney General Elliot Spitzer, Sony BMG paid a $10 million fine and agreed to stop reimbursing independent radio promoters for stations’ expenses. As a result of this settlement and the internet’s shakeup of the music industry, indie promotion’s stranglehold has been largely broken. Recent layoffs in the promotion departments of major labels further evidence the diminishing value of radio publicity. Today, any remaining pretense that radio publicity is a fair trade for the uncompensated use of performers’ artistry is gone, but the law has not been updated to recognize this.
The increasing amount of old music played on terrestrial radio today is further evidence that the AMFA must pass. At its core, the promotion-for-play argument asserts that the majority of music being played is newly released, thereby benefiting artists with publicity. However, the reality is that the number of old songs in rotation today far outnumbers the newly released ones. As testified to Congress by economist Barry Massarsky, programmers today play a majority of songs that are over two years old (52.9%), and a minority of songs released within the year (just 36.5%). This statistic is striking: Only around a third of the music being played on the radio could even ostensibly benefit from promotion. In formats like “classic hits,” “adult contemporary” and “adult hits,” the percentages of music over two years old being played are 100%, 99.5% and 78.9%, respectively. Many popular formats are therefore nearly entirely dependent on recordings by legacy artists to attract both listeners and advertisers. Our law’s narrow “digital audio transmission” phrasing leaves older artists like Estefan to sustain themselves through other revenue streams. Some of these, such as touring, are less accessible to legacy artists due to their age. Congress should recognize that terrestrial radio publicity is no longer a sufficient substitution for a performance royalty.
Legislative change in favor of performers is possible if Congress wishes to make it. We only have to look to the success of the 2018 Music Modernization Act (MMA), a bill that extended federal copyright protection to sound recordings made before 1972. With the passage of the MMA, non-terrestrial radio has increased royalty payments to performers while continuing to provide promotional value. However, the terrestrial radio lobby was successful in keeping their exemption by deploying the tired promotion-for-play argument. Now that all other platforms must compensate legacy performers, it is especially “bad public policy,” to borrow a term then-SiriusXM CEO Jim Meyer used to describe the MMA, for terrestrial radio to be solely exempted.
Without public attention on the AMFA, it is likely that U.S.-based performing artists will continue to lose out. Lawmakers even tried offering a concession to the promotion-for-play rationale: Despite the overwhelming proof that terrestrial radio does not provide compensatory promotional value, Section 7 of the AMFA authorizes the Copyright Royalty Board to consider promotional value when setting royalty rates. Still, the National Association of Broadcasters (NAB) maintains the tradeoff is fair. Despite this powerful lobby, which has spent millions of dollars this year to defeat the AMFA, advocates should not be discouraged from fighting for a full public performance right. The end of the outdated promotion-for-play exchange is in sight, but only when lawmakers are no longer allowed to obscure their payoff by the NAB with this justification.
Rebecca Auburn is a recent graduate of the University of Chicago where she studied music and the history of copyright law. She currently works in the music industry.
