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    The Challenges of the Indie Musician: Piracy, the Value Gap, Broadcast Royalty Exemptions…and Now (For Foreign Performers) a Possible Tripling in US Visa Fees.

    • 14.02.2023
    • By Hugh Stephens
    Hugh Stephens Blogs

    It has always been a challenge for indie musicians and performers to earn a living, and it looks like it may soon get worse for performers outside the US who hope to play gigs there. Among the big challenges to earning a living from music are piracy, the “value gap”, COVID and now a new hurdle, a possible tripling of visa processing fees for performers to enter the US.

    Piracy continues to be a major challenge. The forms of piracy have changed over the years as technology has evolved, but it is still a major source of revenue leakage for the industry, primarily in the form of stream-ripping.  Digital music services were supposed to come to the rescue but the earnings, except for the biggest names, haven’t restored revenues to what they were before the onset of digital piracy. The music industry talks about a “value gap” between what the streaming industry earns and the amount paid to performers. Part of the value gap problem initially arose because the big digital platforms were insufficiently diligent in screening out pirated content, as I wrote in a blog post a few years ago (“YouTube and the Music Value Gap”). That problem has been largely addressed but now the issue is the digital pennies that flow from the big streaming services, of which Spotify is the poster-child, to the artists. This is a source of perennial complaint. It has been reported that Spotify pays as little as a third of a cent per stream. Young artists claim they cannot earn a living wage from streaming royalties. Part of the issue is that revenues are often split with recording studios and rights-holders. Spotify pays rights holders who distribute royalties to performers. That is how the ecosystem has been constructed. It works well for well-known performers but perhaps not so well for emerging artists.

    Another issue that reduces payouts to artists are the exceptions granted to certain broadcasters in the US allowing them to avoid paying performance royalties. This is a longstanding US issue where terrestrial broadcasters are exempted from paying royalties to performers or labels for playing recorded music on air. Online broadcasters and streaming services are required to pay, but not over-the-air AM/FM radio stations. These terrestrial stations do, however, pay royalties to composers and songwriters for broadcasted music, just not performers. This anomaly goes back to the early days of radio and repeated attempts to level the playing field by applying the same rules to terrestrial and online broadcasters regarding performers’ royalties have been beaten back time after time by the broadcast lobby. The failure of the US to pay terrestrial broadcasting royalties to performers has led a number of other countries to reciprocate (one could say, retaliate) by denying similar payments when US works are played in their countries, even though domestic performers benefit from royalty payments. This tit-for-tat measure is estimated to cost US performers over $300 million annually. Securing “national treatment” through trade agreements is one way to get around the denial of benefits to US performers abroad, but a better way would be to change US legislation to remove the broadcast exemption which would then benefit both US and foreign performers. Back in 2021 I blogged about attempts to end the discriminatory treatment through the American Music Fairness Act. That legislation did not pass before the term of the last Congress expired, but has since been re-introduced.

    Canadian and foreign performers face a similar but slightly less onerous provision in Canada. The first $1.25 million in advertising revenues for terrestrial stations is sheltered from performance royalty payments except for a nominal $100 fee. In effect, this is a greatly watered-down version of the performance royalty exemption enjoyed by US radio stations and is as controversial in Canada (and as unpopular with the music industry) as the terrestrial broadcast exemption is in the US.

    With all these impediments, it is a wonder that anyone is able to make a living from playing music. One way that artists have been encouraged to earn a living is through touring. That was the standard response when digital piracy was rampant. “Go on tour” was the answer given by those who argued that musicians would just have to learn to live with piracy and instead earn a living from music by performing live. Then along came the COVID epidemic and the collapse of concerts. As COVID recedes into a bad memory (we hope) touring is resuming, but suddenly a new financial challenge has cropped up for performers outside the United States. That barrier is the threatened drastic increase in the cost of getting into the US to perform. This is applicable to all non-US performers (not just musicians) but particularly affects Canadian musicians who seek to reach a North American audience.

    For many entertainers outside the US, America is the big enchilada. To issue a permit to perform in the US, the US Government understandably wants assurances that the applicant is actually qualified to perform. US artists generally don’t seem to mind the friendly competition, and of course often tour abroad themselves, but want reassurance that performers getting performance visas are qualified to receive them. The Department of Homeland Security (DHS) offers two categories of visas that are primarily used by foreign performers, “O” and “P” visas. “O” Visas are for an individual who possesses  “extraordinary ability in the sciences, arts, education, business, and athletics… and has been recognized nationally or internationally for those achievements”. (US Citizenship and Immigration Services). A “P” visa is for groups of international renown, or for groups who are “culturally unique”, such as musicians who perform folk music in their home country. There is an additional type of P visa for Canadian artists or musicians entering the US through a government recognized reciprocal exchange program (P2 Visa). While there are several windows through which to gain entry, in order to be recognized as being of sufficient stature, applicants need to be certified by a US presenting arts organization or union such as the American Federation of Musicians (AFM) , the American Guild of Musical Artists, IATSE (International Alliance of Theatrical Stage Employees, Actors’ Equity), or SAG-AFTRA. That costs money. In the case of AFM, the charges are $300 for normal processing time (5 to 10 business days); $400 for expedited service (2 business days); or $550 for super-expedited service. Other organizations charge similar processing fees for the recommendation letters. And on top of that, there are the visa fees themselves.

    At the present time, the fees charged for “O” and “P” visa processing by the US Citizenship and Immigration Service (USCIS), a part of DHS, are $460. This was the fee level set in 2016, when they were last raised (from $350). There was a proposal for a hefty increase in visa fees in 2020 as part of a general USCIS fee increase but it was not implemented in the face of a federal court injunction. Now the proposal for an increase is back, in spades. DHS has proposed that the filing fees for a regularly processed “O”-type visa increase from the present $450 to $1,655, more than tripling them (an actual increase of 260%) and for “P”-type visas from $460 to $1615.

    The DHS proposal is not just directed at foreign performers. It is part of a proposed across-the-board increase by DHS to increase funding for its visa operations. In a 200 page notice published in the Federal Register in early January, DHS proposes “to adjust” various fees because its costs have increased, there has been higher demand, and the Department needs to hire more employees. The purpose is supposedly to improve service yet the proposed standard on visa processing is to move from 15 calendar days to 15 business days, a downgrade in service delivery times. The Department is chronically underfunded and at times has been on the verge of furloughing employees because of Congressional failure to approve funding.

    Public comments on the proposed fee increase are solicited with a deadline of March 6. You can submit a comment here.

    It seems that foreign performers have been caught up in a wider problem of US government under-funding although the proportional increase in the “O” and “P” visas is one of the largest proposed. (H1-B visas, usually paid by employers who want to bring hi-tech workers to the US, also face a similar steep increase). One of the reasons for the exponential increase is the inclusion of a $600 surcharge to fund asylum programs. Some visa categories in the humanitarian category remain fee exempt or face no or very small increases as a result of this proposed cross-subsidization. (“DHS proposes this cost shifting approach with the Asylum Program Fee to place greater emphasis on the ability-to-pay principle for determining user fees”, Federal Register, Vol 88, no. 2, p. 453). The question, however, is whether it is reasonable to expect struggling musicians to help fund US government shortfalls and finance humanitarian programs. Clearly some organizations representing performers, such as the American Federation of Music (AFM). do not think so. (“AFM Opposes Proposed USCIS Visa Increases“)

    The AFM statement is both a demonstration of artistic solidarity with foreign performers, such as the Canadian Federation of Musicians, (which is affiliated with the AFM) and a recognition that the presence of foreign performers in the US also benefits US artists and the US entertainment industry. The AFM points out that “Music is collaborative in nature, providing US artists with the ability to connect with international artists, who in turn provide those US artists with access to markets abroad” and that “International touring artists contribute to the US economy in the way of filling venues, booking hotels, and the many other costs associated with a tour”. Advocacy by the AFM and US artists is important because the US government is going to listen, first and foremost, to input from US stakeholders. Foreigners don’t vote for Congress. The AFM has written to Congressman Bennie Thompson, Ranking Member of the House Homeland Security Committee, to solicit his support. Canadian groups such as Folk Music Ontario have also been sounding the alarm, suggesting that its members “please reach out to all US buyers, venues, artists, associations, etc., you may work with, to seek their assistance”. It is interesting to note that so far none of the other associations or unions in the US that engage with incoming performers by processing and issuing certification letters appear to have taken a public position on this. (They haven’t supported the increase, but neither have they spoken up to oppose it. Perhaps silence is their position).

    What about the cost for US performers to tour in Canada as a comparison? It’s either free (depending on an earnings threshold) or $155 with a cap of $465 for three performers or more. Wouldn’t it be nice for Canadian performers if the US offered reciprocal treatment? That won’t happen, but perhaps the projected increase will be made less draconian. DHS needs to be adequately funded, just not on the backs of indie musicians.

    While piracy and inadequate payments to performers from streaming services are long-term issues to tackle, holding the line on exorbitant visa increases would at least ensure that an additional burden was not added to the travails of indie musicians seeking to tour in the US. While DHS faces a funding dilemma, hopefully the burden can be more equitably applied and the proposed increases rolled back to something more reasonable.

    This article was first published on Hugh Stephens Blog