Two faltering music-business giants butted heads Tuesday in a U.S. House hearing over artist compensation for terrestrial radio airplay. And right in the middle of it was Billy Corgan, the Smashing Pumpkins singer making a rare public appearance in his rock-star-goes-to-Washington suit and tie.
Under questioning by the House Committee on the Judiciary on Capitol Hill, Corgan spoke out in favor of a bill that would require broadcasters to compensate performers for radio airplay of their songs. Currently, U.S. law stipulates that only publishers (who represent songwriters) must be paid royalties for airplay, unlike most industrialized nations, which require that artists also be compensated when their performances are broadcast.
The radio industry argues that the 80-year-old practice exists because artists benefit when their music is exposed to the public by radio airplay, which in turn boosts sales of recorded music. But sales of recorded music have declined more than 30 percent in recent years, and artists and record labels are turning to every available revenue stream to compensate for the shortfall.
Record companies are being “taken … by broadcasters who use our music to build their business,” testified Mitch Bainwol, chairman of the Recording Industry Association of America.
In years past, record labels paid hundreds of millions of dollars in various forms of payola to play records, so eager were they for airplay. What changed? Among other things, the power of commercial radio has diminished in recent years as a vehicle for exposing new music while various Internet outlets, both sanctioned and unsanctioned, have gained traction with consumers. Yet commercial radio brings in an estimated $16 billion in annual advertising revenue, an inviting target for labels and artists who have seen their income plummet from sales of recorded music.
Corgan expressed no great love for traditional record companies; his band is currently working without a label. But he said that artists deserve the opportunity to determine how their music will be used and to be compensated for it as they create new business models for themselves.
“From my perspective, this issue is one of fundamental fairness,” he tesitifed. “These particular performances must have value to the stations or they wouldn't be playing them.”
Broadcasters asserted that they are already being hammered by the declining economic, and that further pressure from labels and artists to pay royalties would put many out of business, or force them to stop playing music.
“This bill creates financial disincentives to play music … and significant unintended consequences,” said Steve Newberry of the National Association of Broadcasters. He said radio stations will be even less inclined to play unproven artists and that many listeners will be deprived of local stations that go out of business because they can’t afford to pay royalties.
Committee members broached the idea of an independent study to determine the economic impact of the legislation, and urged the two sides to negotiate a compromise rather than let Congress impose one.
“I don’t want to see small minority broadcasters out of business,” said Rep. Maxine Waters (D-Calif.). “They’re good for the community. Otherwise we’re at the mercy of the conglomerates. I’m hopeful you guys can work it out.”
Bainwol said the record industry would be open to a deal with the broadcasters on royalty rates, but radio lobbyist Newberry flatly declined.
To which Rep. Brad Sherman (D-Calif.) jokingly remarked: “OK, slit your throat, but don’t do it here.”
greg@gregkot.com