Report: Red Tape Costing U.S. Songwriters $2.3 Billion a Year

Today’s singers rarely croon about the evils of government red tape. But a new report says outdated laws and government regulations are costing musicians dearly.

National Music Publishers’ Association estimates that red tape sets back songwriters about $2.3 billion a year in lost revenue–and that’s only in the U.S.

The NMPA’s report, in fact, follows by a day a hearing before a House Judiciary subcommittee to review copyright law as it pertains to the licensing of music. Yesterday’s hearing, and another scheduled for June 25, are aimed at deciding what changes are needed to laws governing how music rights are paid for and how to implement them….

Right now a byzantine system is in place that not only dates back more than 70 years but also differs depending on the distribution platform. Traditional radio stations, for instance, pay royalties to the composer of a song, but not to the artist or band performing it — known in industry parlance as a performance right — if they are different. Sirius XM only pays royalties for songs released after 1972. Pandora does pay government-mandated royalties to songwriters but has been aggressively lobbying regulators to lower the rate in recent years. Use of music in both professional and user-based content on YouTube and other websites and in TV shows or commercials is yet another category of music licensing, with the difference being that it is free-market-based and not subject to government oversight.

Meanwhile, there’s plenty of money being made on the digital music front. 

Clear Channel CEO Bob Pittman says online streaming service iHeartRadio makes “hundreds of millions” of dollars in annual revenue, putting it in the range of Internet radio leader Pandora….

According to its year-end regulatory filing in February, iHeartRadio averaged 143 million hours of listening per month last year, up 29 percent from a year earlier. Pandora Media Inc., which posted $638 million in revenue last year, had 1.73 billion listener hours in May.

iHeartRadio allows listeners to hear Clear Channel’s 835 stations via web-based gadgets like laptops and smart phones.