Radio Stations Fighting Proposed Performance Rights Act

Recently, local radio stations have been airing ads concerning a proposed "performance tax" that major record companies and artists have been pushing Congress to pass. Apparently, those in the recording industry feel that, since they have suffered monetary losses because of the economic downturn, they should be able to recoup those losses by charging radio stations to pay for every song they play over the air. If this "performance tax" were to be written into law, fifty percent of the fees collected would go to the record labels (many of which are owned by foreign companies) and forty-five percent would go to the performing artist, with the remaining five percent going to musicians and background singers.

Radio stations are pushing hard against passage of the Performance Rights Act, as this additional fee would have a devastating effect on them. According to David Fitts, General Manager of radio station 98.5 KTIS in Minneapolis, the effects of the economic downturn and competition from new media are already costing broadcasters from 10% to 40% decreases in revenue. Radio stations already pay millions of dollars in license fees to the FCC, and in royalties to performing rights organizations BMI, ASCAP, and SESAC to compensate musicians and composers.

For more than 80 years, record labels and artists have benefited from the exposure of radio airplay of their music; if it weren't for radio, the vast majority of people would not be exposed to the different musical genres and artists. Radio exposure has also benefited artists by promoting their concerts and doing artist interviews in order to make them more familiar to the public. According to Whit Adamson, President of the Tennessee Association of Broadcasters, over 230 million listeners of free local radio are reached weekly, which is hugely more effective in promoting artist airplay than satellite radio, Internet radio, and other subscription-based radio outlets. Free artist promotion via radio brings in as much as $2.4 billion annually in music sales for record companies and artists----and that does not include revenues they receive from concerts and merchandising.

Broadcasters believe that the recording industry has failed to keep up with the times as the business has gone digital, and that is why the industry is now going after them to rake in more dollars.

If this performance tax becomes reality, radio stations will be faced with layoff of personnel. Some stations will switch formats to all-talk in order to avoid paying this additional fee, and this will adversely affect musical artists further as they will no longer get airplay exposure. Other stations will be forced out of business as they cannot afford to pay more in fees; in those cases, the public loses out not only in being able to enjoy hearing their favorite artists' music, but also on community service information being available to them. Small independent and college radio stations will be burdened and may not survive, due to the added operating costs the performance tax will impose. Also, broadcasters will be forced to charge more for advertising in order to cover the additional fees if this legislation is passed. Advertising is expensive as it is, and many advertisers may not be willing to dish out more money, especially in such a down economy.

Currently there are two bills pending in Congress that endorse this performance tax---H.R. 848 sponsored by Michigan Representative John Conyers, and S.379, sponsored by Senator Patrick Leahy of Vermont.

In response, there have been anti-performance tax resolutions--the Local Radio Freedom Act-- introduced in the House and Senate in support of free local radio. Senators Blanche Lincoln of Arkansas and Senator John Barrasso of Wyoming introduced S.Con.Res.14, and in the House, Representatives Gene Green of Texas and Mike Conaway of Texas introduced H.Con.Res.49. For details on these bills, and contact information for your representatives in Washington D.C., go to www.noperformancetax.org.

If you are against radio stations being required to pay more royalty fees in order to play your favorite music, let your representatives in Washington know how you stand on the issue.