EU threatens $300M in US artist royalties as Congress weighs fairness act

The European Union is preparing to claw back nearly $300 million a year from American recording artists, and only Congress can stop it.

The European Commission opened a formal proceeding in May to revoke American performers' radio royalties under "material reciprocity," threatening $300 million in annual payments that have flowed to US artists since a 2020 European Court of Justice ruling.

"The EU is simply mirroring what US radio giants have successfully lobbied Congress for — an exemption from paying performers," said Gene Simmons, co-founder of KISS, who testified before Congress in December on the issue.

The 2020 ECJ ruling required EU broadcasters in countries including Belgium, Germany and Spain to pay US performers for radio plays, bringing them in line with how songwriters are compensated. The US remains the only major economy where broadcasters pay nothing to recording artists for airplay — a distinction it shares with North Korea, Cuba and Iran. US radio giants iHeartMedia Inc., Audacy Inc. and Cumulus Media Inc. have successfully lobbied to maintain that exemption.

The American Music Fairness Act, a bipartisan bill backed by President Trump and sponsored by Rep. Darrell Issa and Sen. Marsha Blackburn, would require US broadcasters to pay performance royalties while capping annual fees for small stations at a few hundred dollars. The bill has cleared a congressional hearing but awaits markup by the judiciary committees chaired by Sen. Chuck Grassley and Rep. Jim Jordan.

A transatlantic royalty standoff

The EU's material reciprocity doctrine holds that if American broadcasters will not pay performers, European ones should not have to either. The proceeding, opened in May, threatens to undo the payment flows established after the 2020 ECJ ruling — money that reaches not only household names but backup singers and session musicians.

The timing puts Congress in a bind. Passing the American Music Fairness Act would nullify the EU's justification for clawing back royalties, effectively protecting the $300 million annual stream. But the legislation has languished despite bipartisan support, with no markup date set.

What happens next

If the EU enacts its material reciprocity rule before Congress acts, US recording artists and labels would lose an estimated $300 million annually in European radio royalties. If Congress passes the American Music Fairness Act first, the EU's rationale collapses, and the payments continue.

The judiciary committees have not announced a markup schedule. With the EU proceeding already open, the window for legislative action is narrowing.

This article is for informational purposes only and does not constitute investment advice.