Webcasters Like Pandora Should Pay More for Our Music

May 28, 2015

Ray Hair  -  AFM International President

 

On April 29, 2015, I testified before the Copyright Royalty Board (CRB) in Washington, DC, in an effort to boost payments to musicians from digital webcasters like Pandora. The CRB is a three-judge panel that sets rates on the statutory license that covers what webcasters pay for noninteractive distribution. Below is an excerpt from my testimony.

I understand that this proceeding is for the purpose of setting the rates and terms for the statutory license that the Copyright Act grants to noninteractive webcasters. I am submitting this testimony to emphasize the importance of statutory royalties to performing artists.

The AFM is an international labor organization representing over 80,000 professional musicians in the United States and Canada through a network of more than 200 local unions. The AFM was founded in 1896, and is the oldest and largest union of musicians in the world. AFM members record music for sound recordings, film scores, radio, television, and commercial announcements. We perform music of every genre, in every sort of venue, from small jazz and blues clubs to symphony orchestra concert halls to Broadway and local theaters.

The AFM negotiates industry-wide media agreements that set standard working conditions for all musicians who record under them. AFM members span the full range of professional musicians, from featured recording artists who are well-known celebrities to nonfeatured artists who work as session musicians in the recording industry.

The traditional area of activity for labor organizations is collective bargaining, and the AFM has been negotiating an industry-wide collective bargaining agreement, the Sound Recording Labor Agreement (SLRA), which has governed the terms and conditions for the major recording companies and hundreds of independent companies, for 60 years. But, the AFM has long served as an advocate for musicians’ interests in various other contexts, too, including specifically serving as a strong proponent of performers’ rights and copyright protection for performers.

For example, the AFM and the American Federation of Television and Radio Artists (AFTRA, now SAG-AFTRA) were critically important supporters of the Digital Performance Right in Sound Recordings Act in 1995, which created the rights at issue in this proceeding. The unions’ joint efforts contributed to the current structure of the Act, which requires that 50% of the royalties from the compulsory license for digital performances shall go to performers, and shall be paid by SoundExchange directly to them. I am proud that AFM and AFTRA helped secure that performance right and ensured that SoundExchange will pay 45% of the royalties from this proceeding directly to featured artists, and will pay 5% to the AFM & SAG-AFTRA Fund for further distribution to session musicians and vocalists.

I cannot overstate the importance of the revenue stream from the compulsory digital performance license to recording artists and musicians. In my experience as a musician and a labor leader, I know that most of us make a living by patching together revenue from many different sources. Session fees, live performing fees, royalties, teaching, you name it—they are all necessary to earn a decent living, permitting musicians to continue to make music. Every income stream is important to a working musician, but digital performance royalties are becoming more important as music lovers change the way they consume recorded music, from purchasing CDs and downloads to listening to music on digital music services.

Traditionally, CD sales (and later, digital sales) have been a cornerstone of compensation to featured artists and session musicians. The sales support the industry, which provides investment for artists and employment for session performers, provides royalties to featured artists, and for session musicians, and provides payments from the AFM-negotiated Special Payments Fund (SPF) under the SRLA. But I know from experience that sales have declined, and as a result, we see less employment under the SRLA across the country, less investment in artists (which means reduced opportunities), and reduced SPF payments to musicians. In fact, over the last 10 years, SPF collections (and subsequent distributions to session musicians) have declined by approximately 50%.

Digital performance royalties are an increasingly important source of revenue to the industry’s artists and musicians. SoundExchange reported that it paid out $590.4 million in royalties to performers and copyright owners in 2013. It is impossible to overstate the value of these SoundExchange payments to thousands of featured artists who are struggling to start or maintain their careers (or to survive after their touring days are over) and to provide for their families.

The royalties that artists receive from SoundExchange are particularly critical because they come to artists directly, without regard to whether any advances against royalties received from a record label have been “recouped.”

The digital performance royalties are incredibly meaningful for session musicians and vocalists, too. In fact, as physical product and digital download sales decline, I expect that digital performance royalties for session musicians will exceed SPF payments earned based on sales. Our industry experts and our own experience tells us that digital performance royalties are important because patterns of music consumption are changing, so that “listening” is replacing “purchasing.” That is certainly true.

But from a musician’s perspective, these performance royalties have a more fundamental importance. The truth is that we musicians make great music. It is our talent, our training, our hard work, and our passion that results in great recordings that the public around the world wants to hear. Our work is valuable. We believe that the use of sound recordings should command a fair price, and we believe that wherever and whenever our music adds financial value to a business, we ought to share in that value.

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