MusicFIRST Says Performance Royalties Would Only Cost AM/FM Stations 3% of Revenue (Updated)

The National Association of Broadcasters said that if the SoundExchange-backed musicFIRST Coalition succeeds in lobbying Congress to apply a sound recording performance royalty to terrestrial radio station, its member stations would have to pay between 10 and 35 percent of their revenue (most likely to SoundExchange).

However, a musicFIRST representative tells me that NAB "grossly exaggerated" those figures, and pointed to a statement by the U.S. Copyright Office that sound recording owners should be paid royalties equivalent to what publishers and songwriters already receive from stations:

[See update below; it seems musicFIRST's recollection of what Peters said was a bit fuzzy the first time around.]

"Marybeth Peters of the U.S. Register of Copyrights Office was asked about the potential cost of a performance right during the recent Congressional hearing, and she said that songwriters are currently paid about $400 million a year through ASCAP and BMI when their songs are played on the radio. She estimated that the cost of a performance right would be in the same ballpark.

"Last year, radio revenues were about $23 billion. By NAB’s calculations, that would mean a cost of $2 to $7 billion. This is grossly and purposefully overestimated. The actual cost, although yet to be determined, would be significantly lower, in the range of 3 percent of revenue, not 10 to 35 percent."

Update: Now musicFIRST says that Marybeth Peters did not, in fact, put a specific number on what terrestrial radio stations would owe if a sound recording performance right is applied to them. The same musicFIRST spokesperson just sent me the following statement:

"Marybeth Peters did not say how much the performance right would cost, but said, 'Performers and producers need to be paid for their performances to ensure that the creativity and variety of recordings that we all enjoy continue. It is time to end this anomaly.'

"She was asked how the performance right would work. During this conversation, she said, 'I believe that when you craft a solution you craft it so that it is equitable.' Later on, she commented that 'there are lots of ways to make this work.' Congress and the U.S. Copyright
Office will work out the details.

"Under the current system, terrestrial radio pays songwriters and music publishers about $450 million. This is about 3 percent of revenue. This number is obviously far less than the 10 to 35 percent suggested by the NAB."

So basically, the U.S. Copyright Office hasn't yet weighed in on what the specific rate for terrestrial radio stations should be. MusicFIRST, however, apparently thinks that an "equitable" rate would be about on par with what stations already pay to publishers and songwriters -- about 3 percent of revenue.

Background: One reason labels might want performance royalties for sound recordings