A coordinated effort by select European Union member states to overturn a landmark 2020 European Court of Justice ruling jeopardizes nearly $300 million in annual royalties currently paid to American recording artists. This potential legislative reversal directly impacts rights holders, labels, and the broader ecosystem of Black music and urban radio by threatening a critical revenue stream that supports artists who form the backbone of European radio programming.
Transatlantic Asymmetry and the $300 Million Gap
The dispute centers on a stark disparity between how the United States and Europe treat performance rights on terrestrial radio. Across the EU, performers and record labels receive remuneration when their recordings play on AM/FM stations via local collecting societies. In the United States, no equivalent right exists for terrestrial broadcast; performers and labels receive zero royalties from AM/FM radio, while only songwriters and publishers are compensated. Michael Huppe, President and CEO of SoundExchange, argues that the EU’s attempt to exclude American artists from remuneration constitutes outright trade discrimination. If European countries succeed in amending EU law to reverse the court’s decision, the $300 million flowing annually to US artists would cease immediately.
Legal Precedent and the National Treatment Principle
Six years ago, the European Court of Justice issued an emphatic ruling affirming that American recording artists are legally entitled to remuneration when their music plays on European radio. The court declared that under EU law, artists cannot be excluded from royalties based on nationality. This “national treatment” principle mandates that if a country pays its own artists for a specific use, it must similarly pay foreign artists. The Netherlands, Denmark, and Sweden have already adjusted their laws to comply, bringing the number of compliant EU nations to 21 out of 27. Huppe notes that these countries did not experience reduced payments to their own nationals, proving that expanding eligible repertoire grows the pie for all.
U.S. Dependence on American Music and Trade Implications
The threat to American royalties is particularly galling given the heavy reliance of European radio on U.S. content. Songs by American artists constitute more than one-third of all music played on European radio stations. While defenders of the exclusion argue that the U.S. does not pay European artists on terrestrial radio, the European Court of Justice previously rejected this reciprocity argument. Huppe highlights that the United States treats foreign artists equally on all its paying platforms, including satellite and internet radio, which collectively generate almost double the royalties SoundExchange distributes compared to what all of Europe collects from terrestrial radio. Huppe urges the White House and Congress to treat any legislative effort to exclude American artists as a discriminatory trade measure requiring a response.
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