While performance royalties have existed in theory for many years, there has been a portion of these royalties that was very difficult to collect on with any effectiveness and a new segment of these legitimate copyright usage fees that did not even exist when copyright laws were written. These two royalty categories are performance royalties for radio broadcasts and performance royalties for digital downloads.
While it is true the three main performance rights organizations have attempted to enforce copyright law and oversee performance royalty payments over the years, they have lacked an effective method of doing so accurately. Instead of assessing royalty fees for every broadcast of a song, the performance rights organizations have created blanket contracts with the radio broadcasting industry, charging set fees for projected broadcasts. Then using these projections made with an algorithm designed to estimate the actual number of times that a song would have been played over a period of time, the PRO divided the fees among the artists, composers, writers and publishers associated with the songs that were registered with their organization. When digital downloads arrived on the scene, they were treated in much the same way.
In 1995, the U.S. Copyright Office recognized this as a growing problem for the music industry as a whole and granted a new PRO, SoundExchange, the right to pursue performance royalty fees for performances of music via digital cable and satellite television, the internet, and satellite radio but broadcast radio was still relatively immune to paying accurately assessed performance royalties.
In 1997, the music industry in the U.S. still lagged behind the rest of the world in this area. The Performance Rights Act was introduced to Congress in hopes of fixing this situation, due to the urging of the Music First Coalition. Unfortunately, at the time of this writing, the U.S. still has not passed this act into law and artists, composers and writers are losing millions of dollars in royalties every year.
