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The Truth About Foreign Royalties

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by Jennifer Garner, AFM In-house Counsel

Recently, the AFM has received a huge number of requests to waive its mandates to collect and distribute foreign royalties on behalf of US recording musicians through AFM & SAG-
AFTRA Intellectual Property Rights Distribution Fund (the Fund). Many of these requests come from agents, publishers, and even some lawyers purporting to have authority to represent musicians in royalty matters. Some requests are in the form of letters ostensibly from individual musicians that are forwarded to us from foreign collecting organizations. These letters are of questionable or obvious inauthenticity. A few musicians have contacted us directly with concerns based on wildly distorted facts and specious legal analyses propounded by their agents. We feel compelled to dispel the myths and correct the misleading representations.

For decades, US recording artists have been wrongfully deprived of royalties collected on their behalf outside of North America due to a fundamental misapplication of the principle of national treatment underlying several international copyright treaties. Some foreign performance rights management organizations (PMOs) in Europe and Spanish-speaking territories unfortunately have been collecting remuneration generated by the broadcasting of music created in the US, but refusing to pay over such remuneration in whole or in part to US musicians. Their primary excuse is that the US is not a signatory to the Rome Convention, which is a 1961 copyright treaty that provides for the cross-border payment of terrestrial broadcast performance royalties. They have maintained the bizarre position that, because the US has no reciprocal performance right in AM/FM radio broadcasts, they are generally entitled to keep the money they collect for broadcasts of US artists’ works in their territories.

There is no sound justification for this position. Nothing in the Rome Convention authorizes or condones the collection of royalties on behalf of artists of any nationality without distributing such royalties to those artists. Collection without distribution is theft. Theft from a nonparty to a convention is still theft.

Consider the practice here in the US. The US Copyright Act provides a digital performance right for performers (arguably more important today than a terrestrial broadcast right) that many European and Spanish-speaking territories are lacking. Pursuant to various copyright conventions to which the US adheres, SoundExchange and the Fund send abroad millions of dollars in digital royalties every year on behalf of featured and nonfeatured artists, despite the fact that the foreign PMOs are unable to reciprocate. We do this because it is morally and legally the right thing to do.

In contrast, the contention that US artists are not entitled to their royalties from abroad, unless a PMO in a Rome Convention country is representing them, is outrageous. The fallacy is one of false choice, namely, that if our artists want any portion of their royalties from abroad, they must pay an inducement to foreign PMOs and agents. Otherwise, they will receive none of their royalties. This is not a “choice.” This is coercion.

Lately, the aggressiveness with which the PMOs and their shills are hustling the right to manage US artists’ foreign royalties—and split the skim—is alarming. And, why now? The PMOs have been collecting and keeping US royalties for decades with relative impunity. What is the urgency to obtain mandates to distribute the money? 

There are perhaps two factors motivating this activity. First, the Beijing Treaty on Audiovisual Performances, adopted in 2012 but not yet in full force, slammed the book shut on the discussion of collection without distribution. The official record of that convention memorializes the principle of “no collection without distribution” as the proper application of national treatment in copyright treaties. The global consensus is unambiguous. Collection without distribution is morally and legally wrong. Moreover, time is up. Noncompliant PMOs should be feeling the pressure to get with the program.

Second, robust lobbying efforts by the AFM and other US stakeholders to obtain a terrestrial broadcast performance right, and Congressional bills like the proposed Fair Play Fair Pay Act, are gaining traction. If and when such legislation is achieved here in the US, the primary excuse maintained by the PMOs for collecting without distributing would be eviscerated. It appears they are attempting to hedge the consequences by obtaining mandates to collect and distribute royalties on behalf of the most celebrated and exhibited musicians in the world, and draw down a lot of money in fees for doing so.

Every agent standing between musicians and their money is picking musicians’ pockets, and every PMO that is withholding money it collects on US content is in flagrant violation of international norms. The AFM is calling on foreign PMOs to release musicians’ foreign royalties without conditions, in accordance with well-settled international principles, instead of extorting valuable rights from musicians, the Federation, the Fund, and SoundExchange.

On a different topic related to the Fund, I am delighted that Stefanie Taub has been appointed as its new chief executive officer. I am confident that new and exciting initiatives under her leadership will benefit all participants.







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