For one thing, as recent actions show, they have taken the stance that good business requires transparency and sound, equitable regulation.

However, the operative word here is equitable. As Rob Smith of Bacon’s Rebellion points out in an article last week:

When regulations hit some companies more severely than others, for no discernable reason, the policy inevitably causes more problems than it solves.

The Performance Rights Act, passed through committee in both the House and the Senate, is just such policy. By tinkering with the existing royalty structure that has been governing the radio broadcaster/record label relationship for decades, Congress would be forcing one industry to subsidize another, simply because that industry has been unable to maintain its profitability in the new, digital era. As Smith wisely points out:

To compel this through government action would represent a transfer of profits from one industry to another that would result in economic hardships for the broadcasting industry.

Neither the Administration nor Congress wants big business to interfere with government, but the PRA makes no bones about interfering in business. The unfortunate fact, as Smith reasons, is that “political intervention in the economy always carries with it unintended consequences.” The unintended consequences of the PRA wouldn’t be just multi-billion dollar industry players. The unintended consequence would be demise of the small, local businesses (here radio stations) that Congress should be supporting in an uncertain economic time. The PRA chooses the health of one industry over another, to the detriment of local jobs and communities.

RBR-TVBR questions the wisdom behind this decision:

The bottom line is that you really have to wonder about a policy that makes silence the better option for a broadcast station.

When radio stations go silent, the jobs go with them. This loss of jobs would be in addition to money-saving cuts at other radio stations and other economic impacts that will be felt over the long-term as a result of the performance tax.

This all underscores a greater issue – how do the radio and record industries deal with the continued repercussions of the economic recession?

Consider a recent report released by the Center for Economic and Policy Research that says the jobs hole created by the recession could persist for decades.

Write CEPR’s John Schmitt and Tessa Conroy:

Even if the economy creates jobs from now on at a pace equal to the fastest four years of the early 2000s expansion, we will not return to the December 2007 level of employment until March 2014.

As Congress continues to pass legislation aimed at creating jobs, they also debate implementing a performance fee that would destroy jobs existing employment opportunities.

Shutting down some stations completely and putting staff out of work at others are only some of the unintended side effects of the performance tax – side effects that would only serve to exacerbate the lasting impacts of the recent economic downturn.

No sucker for spin from the record labels notorious for beating up on college students, the author finds some hypocrisy in the RIAA’s  arguments.

For more than 80 years, radio and the record industry have enjoyed a mutual relationship where the stations air music free of charge in return for the free promotion of the artists, who earn money based on this exposure in the form of record sales, merchandise and live performances…

Record companies promote the belief that revenue from this tax would solely benefit the artists. However, in reality the labels themselves would receive at least 50 percent of the proceeds. This performance tax would threaten the local radio stations that have always been free to everyone, regardless of income.

Read the full story at The Lantern.

Digital Music News:

At SXSW recently, SoundExchange was trying to match $1 million in unpaid artist royalties. But the non-profit is holding an unpaid royalty account of more than $200 million, according to documents obtained by Digital Music News and information shared directly by the company. And, given the growth arcs, the amount may be quite a lot more….

The number has been skyrocketing year-over-year, highlighting the problems this organization is facing locating performing artists. At the end of 2007, the outstanding ‘fund balance’ was roughly $192.7 million, and at the end of 2006, $96.7 million, also according to the filings….

But more than $200 million sitting there, undistributed? This sounds like a monstrous number, and one that should be drawing some scrutiny. One attorney reviewing the situation noted that “any non-profit carrying more than $200 million on its books has a serious problem,” and indeed, it remains unclear if such a massive logjam can be adequately resolved and paid out.

SoundExchange:

SoundExchange is a non-profit performance rights organization that collects statutory royalties from satellite radio (such as SIRIUS XM), internet radio, cable TV music channels and similar platforms for streaming sound recordings. The Copyright Royalty Board, which is appointed by The U.S. Library of Congress, has entrusted SoundExchange as the sole entity in the United States to collect and distribute these digital performance royalties on behalf of featured recording artists, master rights owners (like record labels), and independent artists who record and own their masters.

Source: The Daily Swarm

50 percent of the revenue would go to the record labels. While the record labels claim that this is about the artists, the truth is that a full 50 percent of the proposed fee would go directly to the record labels.

The performance rights act would limit the exposure of emerging artists; already established and highly profitable artists would benefit at the expense of up-and-coming artists struggling for exposure, but the biggest beneficiaries would be the big foreign-owned record labels. In the past, Congress has deliberately exempted free and local radio from paying a performance fee, in part to prevent of creating powerful incentives to play (or not play) music. If passed, the performance fee may force local radio stations to make a careful cost-benefit analysis of every song they play. Stations may only be able to afford playing “known commodities” (i.e. artists with a proven following).

The performance tax has hidden costs to college radio, further limiting an independent or indie artist’s access to an audience. College radio stations – an important voice for up-and-coming and independent artists – would be especially hard hit by the performance fee. Compliance with the PRA would require huge investments in playlist tracking and reporting systems. Passage of the performance fee could signal an end to college DJs, who share their personal vinyl and music collections on the air to broaden listeners’ horizons.

Performers are already compensated in many ways for their music. Many musicians receive a songwriting credit, which means they are already being paid by radio stations for airplay. If the songwriter is also a performer, they are additionally paid according to their contract with their record label, receiving revenue from music sales, touring revenue and merchandise marketing. And don’t forget – the free promotion by radio stations helps both to make an artist known and to generate billions in music sales, adding to the artist’s bottom line.

New York City songwriter and performing artist Chris Milam also opposes the performance fee: “As an independent artist, my success often depends on independent and local radio. The Performance Rights Act compromises the integrity of the independent artist-radio station relationship. It limits the freedom of the indie station’s format, and obstructs potential compensation for an up-and-coming artist. It rewards the few at the success of the many under the guise of real reform. I don’t support the Performance Rights Act, and honestly don’t know one professional musician who does. Then again, I haven’t met Garth Brooks.”

Not only does it alter the “symbiotic relationship between artist and radio station,” it will significantly impact college radio stations and force many to close their doors.  For decades, college radio stations around the country have provided their communities with unique and varied musical entertainment while promoting new and local artists.

Without local radio broadcasters to spin their music, how many of your favorite bands and artists would have never taken off?

Source: The Dartmouth

The Free Radio Alliance says radio airtime is free promotion that is key to singers’ careers. In fact, they pointed out with posters, that’s how they heard Dionne Warwick’s songs in the first place. Imposing a royalty would only enrich big record labels, including those overseas.

A performance tax on radio broadcasters in the US would have crippling consequences.  College, local and minority-owned stations would be the hardest hit with many of them shuttering their doors.  Broadcasters are struggling in this economy already – added fees and royalties paid to large record companies overseas will only add to that burden.

“The last thing we need is to choke of more off our local media.  We need more voices…that actually represent the local interests.”

Listen to Senator Warner’s complete comments at 1070 WINA by clicking play below.

[audio:http://67.72.16.166/wina/2239543.mp3]

“This is the worst time to impose additional fees on minority-owned radio stations that are already dealing with layoffs, salary cuts and sinking revenues anywhere between 10-50 percent under the current economic crisis.”

The letter, signed by Reverend Anthony Evans and more than 190 other leaders in the African-American community, represents a very serious concern in the locally- and minority-owned broadcasting community.  According to the Congressional Budget Office, the performance tax  to local radio broadcasters could be “substantial”.

Four percent of radio stations in the United States are owned by African-Americans and the performance tax would “disproportionally harm minority radio broadcasters,” according to the letter.

“Minority-owned and church-owned radio stations speak directly to our communities, often carry our Sunday morning church service broadcasts and are a cherished resource to our communities and culture that must be nurtured and protected. Silencing our voices on the airwaves when African-Americans are already underrepresented could be an unintended consequence if this legislation were allowed to pass.”

Click here to read the letter in full (PDF 4MB).  Become a member of the Free Radio Alliance and join in the fight to protect minority-owned broadcasters.  It’s free and easy.

WATE in Knoxville has the story:

At the radio station STAR 102.1, they say the radio performance tax would add on to the thousands of dollars radio stations already pay to play music on the air.

“This added tax will only eliminate jobs and take signals off the air that are serving communities today,” says General Manager Chris Protzman.

Read the entire story at WATE Knoxville.