The American Music Fairness Act: Reshaping Music Royalties and Market Dynamics in 2025

The American Music Fairness Act (AMFA) of 2025 represents a seismic shift in the music industry's economic landscape, aiming to close a decades-old loophole that has left artists uncompensated for terrestrial radio play. By requiring AM/FM radio stations to pay performance royalties for sound recordings, the Act aligns traditional broadcasting with streaming platforms and satellite radio, which already operate under such frameworks. This legislative overhaul has profound implications for IP monetization, investment trends in creative industries, and the competitive dynamics between streaming services and radio.

Fair Compensation and IP Monetization: A New Era for Artists

The AMFA's core provision grants copyright holders of sound recordings the right to collect royalties from terrestrial radio broadcasts, a privilege previously reserved for streaming services and satellite radio. This change ensures that artists, producers, and session musicians receive compensation for their work, addressing a long-standing inequity in the industry. For instance, while radio stations already pay mechanical royalties to songwriters, they have not compensated performers or labels for the use of sound recordings-a gap that the AMFA explicitly closes.

The Act also introduces a tiered system to protect small and local broadcasters. Stations with annual revenues under $1.5 million and parent companies under $10 million in revenue would pay flat fees (e.g., $500 annually for commercial stations or $10 for noncommercial ones), ensuring that local radio remains financially viable. This structure balances the need for fair artist compensation with the economic realities of small broadcasters, mitigating the risk of widespread station closures.

From an IP monetization perspective, the AMFA could significantly boost revenue streams for rights holders. SoundExchange, the organization responsible for distributing royalties, is poised to collect additional fees from radio stations under the new framework. This expansion of royalty collection mechanisms may incentivize further investment in music production, as creators gain a more predictable and diversified income model.

Streaming Platforms: Winners or Losers?

While the AMFA does not directly alter existing royalty structures for streaming services, it indirectly reinforces the principle that artists deserve fair compensation across all distribution channels. Streaming platforms, which already operate under performance royalty frameworks, may benefit from the Act's normalization of such standards. For example, the AMFA's passage could pressure streaming services to improve transparency in their royalty calculations, as the industry increasingly demands equitable treatment for creators.

However, the Act also introduces a potential competitive headwind for radio. If terrestrial stations face royalty costs comparable to streaming services estimated at 15–20% of revenue for satellite radio, they may struggle to maintain profitability, particularly in a market where streaming platforms offer personalized, on-demand experiences. This could accelerate the shift of listeners-and advertising revenue-toward digital platforms, further entrenching the dominance of Spotify, Apple Music, and YouTube.

Yet, even with these safeguards, the long-term viability of small broadcasters remains uncertain. Radio advertising revenue is projected to decline by 5.0% in 2025, while digital formats like podcasting and streaming are growing at 6.5% annually according to industry reports. The AMFA may accelerate this transition, compelling radio stations to diversify into digital content or risk obsolescence.

Market Ripple Effects: Investment Trends and Global Implications

The AMFA's passage could reshape investment flows in the creative industries. With streaming services accounting for 69% of global music revenue in 2025, the normalization of performance royalties across all platforms may further attract capital to the sector. Investors are likely to favor companies that leverage AI-driven personalization and data analytics to optimize content discovery, as these tools enhance the value proposition of streaming over traditional radio.

Globally, the Act extends U.S. artists' rights to collect royalties when their music is played overseas, addressing a disparity that has left American creators undercompensated compared to their international counterparts. This provision could spur cross-border collaborations and investment in global music markets, particularly in emerging economies where streaming adoption is surging.

Conclusion: A Tipping Point for the Music Industry

The American Music Fairness Act marks a pivotal moment in the evolution of music rights and monetization. By closing the radio royalty loophole, it empowers artists while challenging traditional broadcasters to adapt to a rapidly changing landscape. For investors, the Act underscores the growing importance of streaming platforms and AI-driven content strategies, while also highlighting the need for resilience in local media ecosystems. As the industry navigates this transition, the AMFA's long-term impact will hinge on its ability to balance fairness for creators with the economic sustainability of all stakeholders.