What is the Free Radio Alliance?
Free Radio is an alliance of people and organizations that oppose the Recording Industry of America’s (RIAA) efforts to pass legislation imposing a new performance tax on radio stations, restaurants, retail stores and other entities that play recorded music.

What is a “performance tax”? And who is behind it?

  • Simply put, a performance tax is a fee that record labels want the government to impose on radio stations, and eventually charge restaurants, retail stores or any other public venue that airs recorded music.
  • Composers and songwriters are compensated through royalties collected by ASCAP, BMI and SESAC for the performance of their recorded music. The record labels and artists are compensated for their work in the sales of their recorded music, concert tickets and other promotional items.
  • In the mid-90s, Congress passed a very limited performance tax on the digital delivery of recorded music specifically to compensate record labels and artists for harm to record and CD sales that might occur by downloading and recording digital music. Local AM and FM radio and non-digitally delivered music were specifically not taxed for many reasons, including Congress’ recognition of its unique role in providing free entertainment, local news and public service programming designed to help the community, as well as the fact that radio play benefits rather than harms the revenues of the record labels.
  • Now, the record labels are asking Congress to expand the performance tax to local radio, regardless of the fact that music broadcast on local radio cannot be captured for perfect reproduction and that such airplay actually helps make record labels profitable.
  • The ultimate goal of the record industry is to expand the performance tax to ALL public airings of recorded music including bars, restaurants, clubs and other such venues.

Who are ASCAP, BMI and SESAC?
ASCAP, BMI and SESAC are organizations that collect royalty payments from radio stations, restaurants, sporting arenas and jukebox distributors, among others, on behalf of music composers and publishers.

How will this tax affect me or my community?
Anyone who listens to the radio will be impacted. Reportedly, the new tax could cost between $2 and $7 billion annually. Ultimately, anyone who eats at a restaurant or plays a song on a jukebox could also be impacted.

As a radio listener, the quality of news, public service announcements and community information aired on your local stations may be affected. Radio stations will be forced to generate additional revenue through increased advertisements to compensate for the new tax or decrease the quality of their service to listeners. Smaller stations or community radio could actually be forced out of business.

If this tax is assessed on restaurants, bars, amusement parks or any other business that plays pre-recorded music, the cost would likely pass through the tax to the consumer in higher prices or through a lessened availability of music entertainment.

How will this tax affect the quality of the music I listen to on the radio?
Stations may have few options except to air additional advertisements in an attempt to cover the expected $2 to $7 billion tax. More advertisements would mean less space for music, news, sports, weather and public service or community service programming.

Where does this “performance tax” money go?
There are four main record labels – three of which are headquartered outside the U.S. These record label conglomerates would pocket a large portion of the tax.

What other businesses, in addition to radio stations, will be forced to pay the proposed tax?
Restaurants, bars, and retail stores are just a few of the businesses that would ultimately be forced to pay if the performance tax is expanded. Anyone that pays ASCAP, BMI and SESAC to play pre-recorded music is at risk.

How will the proposed tax impact the non-profit community?
Non-profit organizations have traditionally less financial resources to create awareness about their cause or to ask for help. Radio has always helped these groups elevate their voice through public service announcements, donated airtime and fundraising drives.

  • In 2005 alone, the average radio station ran 169 public service announcements PER WEEK with a projected value of $5.05 billion in donated airtime, not to mention direct contributions, fundraising drives and disaster relief information.
  • If a performance tax were levied on local radio, stations would be forced to use more airtime for advertisements. Many non-profit organizations would lose the ability to get their story out, and as a result, may not get the help they need from the community.

How will the performance tax affect “low power” or community radio?
If a performance tax were levied on local radio, many smaller, community or specialty radio stations might be unable to continue operating. Even if these stations are given favorable treatment initially, the threat of an ever-expanding fee being assessed by the Copyright Royalty Board looms large, as has been the case with internet radio.

How does the performance tax relate to the internet radio royalty fight that’s been in the news?
On May 1, the Copyright Royalty Board, which set the royalty rates on streaming internet music, dramatically increased the required royalty payments, threatening the viability of internet radio. To date, only digitally-delivered radio has been assessed this fee, because of the threat of digital downloading. But, the record labels are trying to get a similar fee imposed on free, local radio, even though music broadcast on radio cannot be captured for perfect reproduction.

That’s why the Free Radio Alliance believes it is even more important to fight back now on the issue of performance tax, so that together we can stop the foreign-owned record label conglomerates from hurting local communities.

Radio in other countries pay a performance tax, why doesn’t the US?
Comparing US radio to radio in other countries is an apples-to-oranges comparison. Radio in many other countries is either owned and operated or subsidized by the government, including the BBC. The U.S. radio industry is the envy of the world. Nowhere do listeners have access to as many choices as listeners have.

What is the status of the performance tax proposal in Washington?
The record labels are actively working to push members of Congress to support legislation that would impose a performance tax on local radio stations (H.R. 848, S. 379). Following up on the resounding no sent by members of Congress to the recording industry last year, more than 150 have already joined a counter-measure – The Local Radio Freedom Act (H.C.R. 49) – which would protect local radio from a performance tax.

What is involved with joining the coalition?
Coalition members offer expertise, information and voices to put a face on the people truly impacted by the performance tax. Coalition members do not pay dues or fees, but are active participants in working toward a solution. If you are interested in joining the coalition, please contact Peggy Binzel at 202-448-5200 or info@freeradioalliance.org.