If I were to compare the current music industry to a movie, it would have to be something like "2012" (2009), "The Day After Tomorrow" (2004) or some other similar end-of-the-world flick. The industry always seems to be in some sort of upheaval as new technology emerges, the way people listen to music changes and traditional record labels move closer to becoming obsolete. The latest game changer is legislation that, if passed, could deal a devastating blow to radio stations.
House Resolution 848, the Performance Rights Act, would require terrestrial radio broadcasters to pay royalties to performers including backup singers and musicians for playing their songs. Currently, terrestrial stations only pay royalties to songwriters. Satellite radio, Internet radio and cable TV music channels, on the other hand, pay royalties to both performers and songwriters.
The musicFIRST Coalition, an alliance of organizations representing performers, recording artists, managers, industry representatives and other advocates, held a news conference on March 2 in Washington, D.C., to encourage Congress to move forward with the bill.
According to the Associated Press, the bill, which was introduced about a year ago and which has been approved by the House and Senate Judiciary committees, is sponsored by House Judiciary Committee chairman Rep. John Conyers, D-Mich. After the press conference, Conyers talked about the injustice of performers not receiving compensation for radio stations' use of their work.
"They work and they don't get paid," Conyers told several news outlets. "That's involuntary servitude. They don't even get any choice of whether they want to work or not they just take their work product."
Many radio stations, however, claim that they would not be able to cope financially with the new costs. According to research conducted by the BIA/Kelsey firm, average radio station revenue decreased by 18 percent between 2008 and 2009. Although the bill would implement a flat annual fee instead of requiring payment of royalties for those stations with gross annual revenue under $1.25 million, many believe that the added fee would run local radio stations out of business and result in employee layoffs.
A letter addressed to Speaker of the House Nancy Pelosi and signed by 119 House members on March 19 requested that the Performance Rights Act not be brought to the House floor, voicing concern for the livelihood of small-scale radio stations, according to a copy of the letter posted on the National Association of Broadcasters' web site. The letter also expressed indignation that those who would receive most of the "potentially billions of dollars" collected under the new legislation are the major record labels that own the rights to the songs being aired.
"Three of the four major record labels are owned by international entities on foreign shores," the letter to Pelosi stated. "Passage of H.R. 848 would enrich those entities while putting thousands of American radio jobs at risk, harming local radio stations and our local communities."
While radio station revenues did decrease the past year, musicFIRST spokesman Martin Machowsky has spoken in defense of the act, citing BIA/Kelsey figures that indicate radio station revenue will grow by about 17 percent by 2014. Financial analysts like CNBC's "Mad Money" host Jim Cramer also predict a boost in radio station revenues, as spending on political campaign ads will likely increase now that corporations and labor unions are permitted to directly contribute to campaigns.
"Times are changing, radio is on the rebound and that's good news," Machowsky said in an interview with CongressDaily. "Our view: It's always the right time to do the right thing."
Still, the new legislation doesn't seem to take everyone's best interests into consideration. Although the popularity of radio has been in decline over the past decade, air play has served as a free promotional opportunity for artists. Altering that symbiotic relationship between artist and radio station will likely do more harm than good.
"[The Recording Industry Association of America] can employ all the fuzzy math logic in the world, but it won't overshadow the undeniable fact that a performance tax would cripple a musician's No. 1 promotional vehicle while lining the corporate coffers of foreign-owned record labels," NAB executive vice president Dennis Wharton told CongressDaily.
Record labels may be suffering financially, but undermining radio stations to save the skins of a few major labels can hardly be called a solution.
