US Performance Rights Act edges closer

The move to force AM/FM radio stations in the US to pay performance royalties has gathered speed following approval of legislation by the Senate Judiciary Committee. Although digital radio services in the US are already paying performance rights fees, their AM/FM counterparts only pay composers. The Performance Rights Act must now pass through both houses of Congress before it becomes law.

With recorded music sales continuing to fall in almost all developed territories, the positive position of global performance rights distributions to producers and performers is providing some relief. Total distributions of performance rights collections increased by 16% to US$1.5 billion in 2008, up from US$1.3 billion in 2007. The level of distributions to producers and performers is still dwarfed by authors’ revenues, but the growth in this revenue source is providing both producers and performers with a valuable income stream, at a time when the main source of income is continuing to fall.

We at Music & Copyright have calculated that performance rights distributions to record producers totaled US$790.1 million in 2008. This compared with US$712.7 million in payments to performers. Europe is the largest region for performance rights, accounting for around 72% of the total. In most cases broadcasting accounts for the largest share of performance rights revenues followed by public performance, although this can vary from country to country.

Performance rights royalties for producers and performers are often the responsibility of a single collection society. However, the structure and process of distribution can vary greatly from country to country, partly because of varying national legislation and international copyright treaties.

Although the greatest scope for growth of performance rights collections is in regions such as Eastern Europe, Latin America and Asia, the US has possibly the greatest potential of all. It had one of the largest increases in collections in 2008. SoundExchange collects performance rights for music and its 2008 distribution figure stood at US$100 million, up from US$36 million in 2007. However, the absence of a terrestrial radio agreement is a glaring omission. The National Association of Broadcasters has maintained that music played on the radio offers free promotion and boosts sales and so should not incur any broadcast fee.

China is also a glaring omission as a country that does not recognise performance rights. Although China amended its copyright law to provide a right of remuneration for the public performance of music as part of its commitment to TRIPS, it took several years for it to draft a schedule of tariffs, which were then blocked by the State Administration of Radio, Film, and Television. No new tariffs have been proposed. Other countries that do not recognise performance rights include Iraq, Iran and North Korea.

The largest single performance rights collection society in terms of revenues is the UK’s Phonographic Performance. In 2008 PPL licensing revenues increased by 11% to £127.6 million (US$186.7 million) compared with £115 million in 2007. The Dutch neighboring-rights society SENA had one of the lowest cost percentages of any collection society, at just 9.2% in 2008. It also has one of the highest levels of performance rights payments compared with the overall recorded music market. For 2008 the share stood at 25.1%.

Music & Copyright is a fortnightly research service published by Informa Telecoms & Media. Please join us at Linkedin

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