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    Paul Fakler Comments on Radio Royalties Bill

    October 23, 2013

    Intellectual Property partner Paul Fakler was interviewed by Law360 after Rep. Mel Watt (D –NC) introduced a bill that would “alter the landscape of music licensing” by extending a performance right to terrestrial radio.

    Law360 reported that, “In most countries, both traditional radio stations and digital stations like Pandora pay for recorded music and the underlying compositions, but American over-the-air stations are only legally required to pay for the compositions. Performers and record companies have long pushed for old-style radio to pay for both. On Sept. 30, Watt proposed the Free Market Royalty Act, which, like a failed 2009 measure, would extend a performance right for terrestrial radio. But it would do so in a far different way than its predecessor: by completely eliminating compulsory licensing for both digital and over-the-air stations.”

    Mr. Fakler said that a move to deregulate the industry and remove oversight could be viewed as an invitation for abuse by large record labels. He also noted that performance rights had generally been regulated because of the “inherent dysfunction” of a market in which the biggest labels and publishers control vast portions of popular music.

    “Any company that owns a significant portion of music has inherent and absolute market power because you can't have a viable service without them,” Mr. Fakler said. “You can't program around even one major record label.”

    Allowing record companies to collectively bargain without the oversight of the Copyright Royalty Board or a rate court, tips the bargaining leverage even further to one end, Mr. Fakler said: “It's keeping all of the best stuff for the record companies from the existing regime and getting rid of everything that benefits music users.”