Radio Performance Tax


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Posted by Doug on February 20, 2010 at 10:00:04:

In Reply to: Stations Stop The Music For Tune Tax posted by FYI on February 19, 2010 at 17:54:07:

Uploaded By: DylanBolin
1 day ago


If you’re anything like me, you know a musician or two. Maybe you’ve had a keyboard player crash on your couch, or maybe even lost your girlfriend to a drummer. Maybe you’ve enjoyed the vicarious thrill of impressing your friends by nailing a particularly difficult guitar solo while playing Rock Band on Expert.

Even if you don’t personally know a musician, you can certainly appreciate what they do.

Chances are you’ve also heard a commercial on your favorite radio station (or seen the commercial on a television station owned by a company that also owns a radio station) instructing you to call your Congressperson and tell them to vote “No” on something called the “Radio Performance Tax.” Your first response was likely: “The what?”

First of all the “Radio Performance Tax” is not really a “tax,” any more than a rate increase from your local energy utility is a “tax,” but the word “tax” (especially in this economic climate) is certain to get people’s attention. The language of the commercials seems to imply that Mr. and Mrs. John and Jane Q. Taxpayer will be responsible for bailing out huge record labels, which is not the case. It’s being called a “tax” by the executives at radio stations because it is a fee to be paid by Terrestrial Radio Stations (the non-subscription, free radio that you receive) that, if the bill(s) pass, will be a major financial blow to an already beleaguered broadcast industry.

The Official Summary for the bills, H.R. 848 sponsored by Rep. John Conyers (MI-14) and S. 379 sponsored by Sen. Patrick Leahy (D-VT), is an amendment to federal copyright law allowing “performers of sound recordings equal rights to compensation from terrestrial broadcasters.”

Now, on the surface, it sounds completely reasonable that the musicians that you hear on the radio should be compensated for their creativity and talent, but this is not the model that has been in place for the last 80 years. For the last 80 years, broadcasters have argued that the musicians are indeed paid; paid with the exposure that they receive as their music reaches hundreds of thousands of potential fans. It seems that now, in the Era of new media, artists and their representatives are seeking more tangible remuneration.

It is worth noting that the revenue generated by these fees will be split 50/50 by the musicians as mentioned and with the holder of the music’s copyright which, 9 times out of 10 is a record label, of which many are foreign-owned. To be sure, the profit for any one record label will be greater than that of any one musician. Which is probably why Congress has gotten involved; your average bass player doesn’t have that kind of lobbying power in Washington, but you can bet that BMI (Broadcast Music, Inc.) does.

Opponents of the bill say that it will destroy the Independent, College and “Mom and Pop” radio stations by crippling them with fees. This is addressed in the bill’s Official Summary. The bill will essentially establish a flat fee for terrestrial stations with gross revenues of less than $1.25 million, and for noncommercial and public broadcast stations. According to estimates, this would be roughly $500-$1000 a year for a college radio station, $1000-$5000 a year for a medium sized station and more (much more) for the Big Dogs who make the most money; enough money to purchase and run ads decrying the bill.

And here are some other facts to consider: In most other countries, musicians do receive royalties for play on terrestrial radio stations, including American musicians. But since America has no terrestrial radio royalty structure in place, those same American musicians receive none of the royalties.

This “tax” is also already being paid here in America by internet, satellite and other subscriber-based radio stations.

In conclusion, this is a classic case of one struggling business entity (ASCAP) trying to extract income from another struggling business entity (your favorite local radio station). ASCAP lobbies Congress, your favorite local radio station lobbies you. Some call it a “job-killer,” others call it “what’s right.” If the bill passes, it may cause a local terrestrial radio station to fire another jock, if it doesn’t pass, a talented musician doesn’t get paid. Either way, someone won’t be able to make ends meet. What’s it gonna be, folks, the lady or the tiger?



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