Gene Simmons testifies at Senate hearing about American Music Fairness Act | full video

Key Concepts

• Copyright Law (Composition vs. Sound Recording): Distinction between the copyright held by songwriters/music publishers (composition) and that held by recording artists/producers (sound recording).
• Performance Royalties: Payments made to copyright holders when their work is publicly performed.
• Terrestrial AM/FM Radio: Traditional over-the-air broadcast radio.
• SoundExchange: A non-profit performance rights organization that collects and distributes digital performance royalties for sound recordings.
• American Music Fairness Act (AMFA): Proposed bipartisan legislation aimed at establishing a public performance right for sound recordings on terrestrial radio.
• Local Radio Freedom Act: Legislation opposing the imposition of new performance fees on local radio.
• Intellectual Property (IP): Creations of the mind, such as inventions, literary and artistic works, designs, and symbols, names and images used in commerce.
• Constitutional Rights (Article 1, Section 8, Clause 8): Grants Congress the power to promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
• Payola (Poliola): Undisclosed payment for broadcast of programming, often illegal.
• AI Regulation: Rules and guidelines for the development and deployment of Artificial Intelligence, particularly concerning its impact on creators' rights.
• Music Modernization Act (2018): Legislation that updated copyright law for the digital era.
• Carveouts: Specific exemptions or reduced obligations within legislation, often for smaller entities.
• Promotional Value: The benefit artists receive from radio airplay in terms of exposure and audience growth, which historically was argued to offset direct compensation.
• Global Disparity in Royalty Payments: The difference in how various countries compensate artists for radio play.

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The Inequity of Terrestrial Radio Royalties for Recording Artists

The hearing addresses a long-standing inequity in the American music industry: while songwriters and music publishers are compensated when their musical compositions are publicly performed on terrestrial AM/FM radio, the recording artists and producers who hold the copyright in the sound recording of that composition receive no royalties. Chairman Tillis highlights that America is the only democratic nation, and one of the few countries globally (alongside Iran, North Korea, and Cuba), that does not compensate performers for AM/FM radio play. This policy denies American artists an estimated $200 million annually in performance royalties they would receive in almost any other country. The purpose of the hearing is to find a "just and fair solution" to this issue.

The Principle of Creator Compensation and US Isolation

Senator Schiff emphasizes the fundamental principle that creators deserve compensation for their work, a principle enshrined in the Constitution (Article 1, Section 8, Clause 8). He points out that the US's refusal to recognize performance rights for sound recordings on terrestrial radio places it in "troubling company" with nations like Iran and North Korea, while nearly every other industrialized nation, including China, provides such compensation. This domestic policy also leads to American artists losing an estimated $70 to $100 million annually in foreign royalties, as other countries reciprocate by not paying US artists.

The American Music Fairness Act (AMFA)

The proposed solution is the bipartisan American Music Fairness Act (AMFA), led by Senators Blackburn and Padilla. This bill aims to close a loophole in copyright law, ensuring artists and music creators are paid for the use of their songs on terrestrial radio. Senator Blackburn notes that AMFA would bring corporate radio broadcasters in line with all other music streaming platforms (e.g., Apple Music, Spotify, Pandora, SiriusXM, YouTube), which already pay performers. The bill includes protections for small, college, and non-commercial radio stations, with proposed carveouts such as a $100 annual cap for college stations and a $500 annual cap for certain small market stations (those with annual revenue of $1.5 million or less). It also explicitly prevents these new royalties from diluting existing songwriter royalties.

Arguments for and Against the AMFA

Arguments in favor of AMFA (from SoundExchange CEO Michael Huppy and musician Gene Simmons):

• Historical Injustice: For 16 years, radio corporations made roughly $250 billion in advertising revenue while recording artists received "exactly zero."
• Changed Music Landscape: The traditional argument that radio provides promotional value (leading to album sales) is outdated. Streaming platforms now account for 85% of music industry revenue, and music discovery primarily happens on social platforms like TikTok and YouTube.
• Inconsistency: Broadcasters pay DJs, talk show hosts, and artists for online streams of their AM/FM programming, but not for the analog broadcast. The system is "broken" where compensation depends on "which button you push on your car dashboard."
• Economic Impact for Artists: For emerging artists, these "pennies" can be the difference between success and failure, allowing them to devote more to their craft.
• Global Reciprocity: Passing AMFA would enable US artists to collect hundreds of millions in foreign royalties currently withheld.
• Broad Support: The bill is bipartisan and supported by every administration in the past 50 years (including Trump and Biden), the US Copyright Office, and the US Patent and Trademark Office (USPTO).
• Feasibility of Payment: SoundExchange already collects data for online rebroadcasts, making the mechanics of distributing royalties for terrestrial radio "quite doable."

Arguments against AMFA (from local broadcaster Henry Hinton, representing NAB):

• Harm to Radio: A new performance royalty would "create harm for stations, listeners, and these very same artists," jeopardizing jobs and forcing cuts in local involvement.
• Radio's Community Value: Local radio is a "uniquely free service" and the "backbone of our local communities," providing vital news, emergency information (e.g., raising $365,000 for Hurricane Matthew relief), and entertainment.
• Continued Promotional Value: Radio still plays a "phenomenal" promotional role, with record labels actively seeking airplay to launch new artists and hits. Hinton cites an email from a program director receiving 16 contacts from record label representatives in five days, stating that a "handful of spins in prime time listening" can match the exposure of "30,000 streams in one week."
• Economic Strain on Radio: Radio stations already pay numerous fees (FCC, PROs like ASCAP, BMI, SESAC, GMR, and streaming collectives like SoundExchange). Revenues are declining, down 20% since 2019, with further projected decreases. Hinton argues that an additional fee, even $500, is economically untenable for many small market stations "barely hanging on."
• Free Market System: The US operates under a free market system, unlike some government-owned European radio stations that pay royalties. The current system has "worked for a hundred years."
• Recording Industry Profits: The recording industry is currently making "record profits," growing 3% last year to $17.67 billion.

Notable Statements and Examples

• Senator Leahy (2009): "It appears the broadcasters are using someone else's property without compensation. That might be okay in other countries, but it's not consistent with American property laws."
• Gene Simmons' Examples:
  • Bing Crosby's "White Christmas": Played millions of times, everyone involved (radio, advertisers, DJ) got paid except Bing Crosby.
  • Elvis Presley: Never received a penny for millions of radio plays, despite being a global "emissary" of American culture.
  • George Strait's "Amarillo": Simmons recounts Strait's surprise upon learning he received no compensation for hundreds of thousands of radio broadcasts.
• Simmons' Strong Stance: He calls opposition to the bill "unAmerican" and controversially states that artists are treated "worse than slaves" because "slaves get food and water. Elvis and Bing Crosby and Sinatra got nothing for their performance."
• Simmons' Advice for Young Artists: "Have a fallback position" due to the music industry's disarray and "minuscule amounts" artists receive from other sources. Emphasizes the "10,000-hour principle" and hard work.

Other Considerations

• AI Regulation: Senator Schiff briefly raises concerns about a potential White House executive order preempting state AI regulations. He stresses the need for "common sense AI regulation" to protect artists from unauthorized use of their work or likeness, advocating for federal leadership but supporting state action in its absence. Senator Welch and Simmons also affirm the need to protect intellectual property from AI exploitation.
• Economic Impact Modeling: Chairman Tillis requests the NAB to provide modeling on the economic impact of the AMFA on various stations, including a market basket analysis of foreign reimbursement models, to better inform policy decisions.
• "Poliola" Concerns: Senator Blackburn raises concerns about a "new form of poliola" where artists perform private shows for advertisers, increasing radio's value without direct artist compensation. Hinton denies this, stating NAB has strict policies against payola.

Synthesis and Conclusion

The hearing reveals a stark division between recording artists and broadcasters regarding performance royalties for terrestrial radio play. Proponents of the American Music Fairness Act (AMFA) argue that the current system is an archaic, unfair, and un-American injustice that deprives artists of deserved compensation, places the US in a league with authoritarian regimes, and costs American artists hundreds of millions in foreign royalties. They emphasize the diminished promotional value of radio in the streaming era and the feasibility of implementing a fair payment system with carveouts for small stations. Opponents, primarily local broadcasters, contend that new fees would severely harm an already struggling industry, jeopardize local services, and that radio continues to provide significant promotional value. While acknowledging the vital role of local radio, there is a growing consensus among legislators that the current system is unsustainable and that action is needed to ensure creators are fairly compensated for their work, especially in a rapidly evolving digital landscape. The discussion highlights the need for a balanced approach that supports both the creative community and the essential service provided by local radio.