The labyrinthine world of music royalties faces potential upheaval as Congress considers new legislation to reshape how artists and record labels are compensated for radio play. The American Music Fairness Act (AMFA), introduced in 2025, seeks to establish a new royalty system requiring terrestrial radio stations to pay for the public performance of sound recordings, fundamentally altering a decades-old broadcasting economic model. Senators from both sides of the aisle—Marsha Blackburn, Alex Padilla, Thom Tillis, and Cory Booker—have rallied behind the bill, indicating strong bipartisan recognition of the issue’s importance.
Currently, radio stations pay royalties only for musical compositions through organizations like ASCAP and BMI, which compensate songwriters and publishers. However, the stations have historically been exempt from paying for the actual sound recordings they broadcast. The bill amends Section 106 of U.S. Copyright law to include public performance rights for sound recordings. This creates an unusual disparity, as digital and internet radio services have long been required to pay both types of royalties.
The AMFA would channel these new sound recording payments through SoundExchange, directing compensation to performing artists and record labels. The bill includes provisions designed to protect smaller broadcasters, offering reduced flat fees for stations with limited revenue. Music creators should consider registering their works with collecting societies to ensure they receive all entitled royalties if the legislation passes. Larger commercial broadcasters could face substantial financial impact, with projections suggesting royalty rates might exceed 20% of revenue. Larger commercial stations would face royalty rates determined by the Copyright Royalty Board (CRB), which would reassess these rates every five years to guarantee they remain fair and economically viable.
This legislative push builds upon the foundation laid by the 2018 Music Modernization Act, which overhauled copyright laws for digital streaming but left terrestrial radio’s exemption from sound recording royalties intact. The broadcasting industry has traditionally opposed such measures, arguing they threaten local radio’s sustainability. Meanwhile, artists and record labels view the proposal as long-overdue recognition of their rights. This reform represents a significant opportunity for musicians to diversify their revenue through sync deals, an increasingly vital income stream in today’s fragmented music marketplace.
If passed, the legislation would align American practices with those of most other developed nations, where radio stations pay for both composition and recording rights. The outcome of this congressional effort will likely reshape the financial ecosystem of both the music and broadcasting industries for decades to come.
