US Intellectual Property Enforcement Coordinator Victoria Espinel said that this would create “a right of public performance for copyright owners for sound recordings transmitted by over-the-air broadcast stations.” This isn’t a necessarily a new position for the White House, as copyright officials have spoken out in support of the performance fee before.

However, large and small broadcasters alike have responded that the performance fee will be detrimental to local American radio stations. Despite the smallness of the recommendation within the scope of a relatively large white paper, the performance fee would have far-reaching effects in an already troubled economy. The National Association of Broadcasters issued a statement decrying the job-killing effect on the industry, and noting that it aimed at broadcasters “without offsetting provisions and benefits that recognize the unparalleled promotional value of radio airplay.”

Members of Congress have also shown their opposition to the performance fee. Currently, there is no bill proposed in Congress to create a radio performance fee, but it’s expected that one will be introduced. Advocates of local radio and the Free Radio Alliance are already circulating a resolution in support of radio in the House; it has more than 125 signatures. A similar resolution is being circulated in the Senate and has 16 signers.

The Free Radio Alliance will keep providing updates to the performance rights debate. In the meantime, write your congressman and tell them to support free and local radio and sign the Local Radio Freedom Act Resolution.

Early next year, it will be important for members of the Free Radio Alliance to educate members of the 112th Congress on the core of what made the PRA so contentious to begin with: the threat it poses to thousands of American jobs and the potential destruction of an industry that is composed largely of local businesses.

Yesterday’s opinion piece on Coloradoan.com by Fort Collins resident Deb Davenport pointed out exactly the cost that could be seen in communities across the country:

As it stands now, some radio stations already have closed because they couldn’t hang on in this tough economy. That means jobs have been lost. If the Performance Rights Act becomes law, we’ll likely lose additional jobs and stations because the new royalty will be unaffordable.

In a classic case of “biting the hand that feeds you,” the record labels continue to ignore the fact that putting radio stations out of business will also affect their bottom line. The same Coloradoan piece juxtaposes what the record labels say they want with how their business model actually works:

… it seems like the last thing the recording companies would want is for more stations to shut down. After all, radio airplay directly translates to about $2 billion in annual music sales. And radio impacts the success or failure of an artist like no other medium, as is demonstrated by the millions of dollars spent by record labels each year to promote their music for radio airplay.

Well over a majority of the 111th Congress opposed the idea of a performance fee for good reason; the Performance Rights Act will cost American jobs and could potentially take away radio stations that are valued parts of their communities. In Davenport’s words, “Any and all gains made by the recording companies will come at the expense of our community.”

The FRA will continue to monitor any potential movement on the PRA during the lame duck session and will react accordingly, but we remain cautiously optimistic that there will be no action until next year. That means the 112th Congress will have the opportunity to tell the record labels that they won’t sacrifice one industry and its supporters for another. It will be our job as supporters of free and local radio to make sure they hear that message and are equipped to deliver it.

But the new Congress isn’t sworn in until January. In the meantime, a lame duck Congress represents an opportunity for the record labels to make a play to pass the Performance Rights Act, most likely by sticking it into more politically supported, “must-pass” legislation. While more than 260 members of Congress opposed the performance fee in the last Congress, sometimes the unpredictable happens. We’ve accomplished a lot in this session and this Congress is drawing to a close, but the proverbial fat lady has not yet sung, and we must remain vigilant. The Free Radio Alliance has been keeping a close eye on the rumbling in the remnants of the 111th Congress and will report any developments as they arise. If the labels engage with their usual antics, we will need to continue to fight with the same vigor that has stopped this legislation thus far. If the time comes for us to re-engage, together, we will need to remind the existing members of Congress why they need to continue to support free and local radio.

Right now, the skies are clear and the horizon is calm on this proposed legislation. But fall is an unpredictable time in Washington, and it might be a good idea for us to remember our umbrella. Check back often for updates and as always, thanks for all you do to protect local radio.

Many of the candidates we contacted are adamantly opposed to the performance tax and understand the detrimental effects it could have on local musicians and radio stations, as well as their communities. Raj Goyle, candidate for Kansas’ 4th District, said:

“This tax would not only cause distress to the owners and employees of such stations; it would also deprive the community of a free voice. The rights of performers must be protected, but I believe there are other methods and means to accomplish that goal.”

David Rivera, running for Congress in Florida’s 25th District, echoed these concerns about the effect on local communities:

“In addition to providing essential services to many around the nation, the radio industry creates thousands of jobs and a government-mandated performance tax will only threaten to eliminate these jobs and services. …minority, religious and other independent radio stations will be unfairly hurt by this tax.”

Other candidates, like Marlin Stutzman, running for Congress in Indiana’s 3rd District, alluded to the pre-existing financial agreements that enable songwriters to be paid fairly within their industry and could do the same for artists:

“…if there is to be any payment system for the recording artists for air play then it should be put together within the industry and not mandated by the Federal Government. Small businesses have too many regulations placed on them already…”

Still other candidates noted that the current system has allowed both the recording industry and the radio industry to flourish, and only the recording industry has failed to keep up with the times. Matt Zeller, a candidate for Congress in New York’s 29th District, said:

“I am fully opposed to the government-mandated performance tax on radio stations because the system has allowed each party to grow prosperous under the current model, and so fundamentally changing the rules would cause an undue burden on the radio industry. At a time of such economic hardship, we should working on creating solutions that would get more people back to work, rather than passing legislation that will cost people their jobs.”

Candidates’ reasons for opposing the performance tax are as varied as their backgrounds and constituencies. But their decisions to oppose this legislation highlights the damage they believe the tax could have on their districts and communities, not to mention the recording industry and the American economy as a whole.

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