Rep. Mel Watt’s Free Market Royalty Act

Recently, Rep. Mel Watt introduced the Free Market Royalty Act (FMRA), designed to compensate music creators and ensure fair competition among radio services by allowing rates for music to be set in the free market instead of by the government, while still allowing a "one-stop license" for stations through SoundExchange for all the music performances they use.

The bill promotes free market principles by assuring a market price without government intervention for all music performances, while concurrently standardizing the licensing system so all platforms are treated equally.

Current law already requires royalty payments from Internet, satellite, and cable radio stations, but exempts over-the-air radio. While internet radio stations like Pandora pay artists per song, AM/FM, by law, does not have to pay any royalties for the music that they play. With the passage of FMRA, the government will provide equal opportunity for competition between all radio stations to negotiate with artists for royalty payments.

The bill applies only to radio platforms.  Like current law, it does not require any payment from bars, restaurants, retailers or venues.

This legislation promotes free markets in the music industry, by allowing for private negotiations, and collective negotiation via SoundExchange.  Digital Liberty has long advocated for free markets in the music industry, and Rep. Watt's legislation would go a long way to move away from industry going to government rather than the market to set prices.  Ultimately this bill provides for a freer, fairer marketplace in the music industry that opens the door for free market negotiation on terms of compensation for recording artists’ works.