PERFORMANCE TAX: Consideration Points
This is from the National Association of Broadcasters, Washington, D.C.
Record labels, artists and radio broadcasters have a mutually beneficial relationship: Free radio airplay of music by over-the-air broadcasters promotes record labels and artists, and generates millions of dollars in sales of music.
On a number of occasions in the last 50 years, Congress has looked at the idea of a "performance royalty" -- or "tax" -- and has found that the record label idea has no merit.
In 2001, the Copyright Arbitration Royalty Panel (a branch of the Library of Congress) found "essentially undisputed testimony that traditional over-the-air radio play has a tremendous promotional impact on phonorecord sales."
Radio stations that stream music over the Internet do pay a fee to both artists and their labels.
Broadcasters also currently pay $550 million dollars annually to groups like BMI, ASCAP and SESAC, which goes to compensate songwriters and music publishers. Broadcasters recognize that songwriters have less opportunity to monetize their work. Artists, on the other hand, are able to parlay free airplay into increased album sales, concert sales and merchandizing opportunities.
Local broadcasters should not be taxed for playing music over-the-air just to subsidize the failing business model of RIAA and the foreign-owned record label conglomerates.
Whether it's the Grammy's or the Country Music Awards -- "I want to thank radio stations for playing my music" is heard again and again. Only God and mom are thanked more.
Performing artists "get paid" by the record label at the time they sign a recording contract. It is not the fault of the radio stations that many record labels have systematically abused artists for decades.
If this is a case of 'fairness to artists' NAB welcomes the debate with the record labels. Radio stations introduce and promote artists to an audience of 230+ million people every week. Contrast that with the decades-long exploitation of artists by record labels - most recently demonstrated in a lawsuit against Universal Music Group for allegedly cheating artists like Count Basie and Benny Goodman out of royalties.
Call it a royalty or call it a tax -- it's irrelevant. Whatever you call it, this would be a massive transference of between 2 and 7 billion dollars annually from America's hometown radio stations to the mostly foreign-owned record labels.
Thousands of jobs have been lost in the radio business in the last year; stock prices have collapsed. A performance tax would force radio stations to lay off thousands of more employees. This kind of revenue loss would also force many radio stations to cut back or abandon public service and charitable activities in the communities they serve.
Some radio stations that play music will simply switch to all-talk format -- thereby avoiding having to pay the new "tax." If radio stations stop playing music, how does that benefit RIAA and the artists?
Free, local radio reaches 235 million listeners every week -- which vastly dwarfs the promotional value of artist airplay on all of the other music platforms like satellite radio, iPods, etc.
A study by former Stanford economics professor James Dertouzos valued radio airplay's promotional value to artists and labels at between $1.5 - 2.4 billion annually.
Label executives are able to enjoy a pretty lavish lifestyle in the Hollywood Hills as a result of the promotional value provided by radio airplay.
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