Posts Tagged ‘Performance Tax’

Black Radio and The Performance Rights Act

May 26, 2010

Since its introduction, I have written extensively here about the Performance Rights Act (PRA). The PRA, sponsored in the House of Representatives by Rep. John Conyers, would require traditional radio stations to pay performance royalties as well as the ones that are already paid to the songwriter. On the surface it seems like a good idea, but examination reveals its flaws quite readily.

One of the most worrisome flaws being the effect that the legislation could have on minority-owned stations. Of course, like everything else pertaining to this act, there is viscous argument on the subject. Elliot Millner at BlackVoices hit on some excellent perspectives in his recent post on the subject:

The main beneficiary of the Performance Rights Act (if passed) would not be the recording artists whose music is being played; it would be the record labels, who would reap the benefits of most of the royalties collected, just as they receive the majority of the money from artists’ album sales. Also, the main beneficiaries of the Performance Rights Act not passing would not be black radio; it would be large broadcast radio corporations, both black-owned and others, which would escape having to compensate artists for using their music.

Despite the fact that the post contains an overall hostile stance towards large broadcasters, you’ll notice he agrees with my stance that the labels, not the artists, would be the primary beneficiaries of the PRA. I propose that this underscores the validity of my assertion.

He goes on to share his excoriating opinions of big broadcasters, but then at the end of the post comes a fascinating observation:

This is yet another unfortunate instance of divide and conquer: Instead of attacking the entities (record labels) that are whoring them both, radio broadcasters and artists have chosen to go to war with each other. Ultimately, the only winner in this drama will be the record companies, who will continue to prosper (relatively speaking) in tough times, while those that should be waging war against them continue to foolishly attack each other.

Now, I’ve often commented on the fact that it’s a shame that so many artists are unable to see how the labels are leveraging them. High-profile spokesmen are terrific for any cause. I had not, however, given consideration to the “divide and conquer” aspect of the struggle.

Despite our differing on a few things, I think that Mr. Millner and I agree on several aspects of the situation. Somehow I don’t think getting “played” by the labels will be as good for the artists as getting played on the radio has been.

Image: Daehyun Park Rights: CC 2.0

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Performance Rights Act: Civil Rights Leaders Weigh In

May 19, 2010

When people think of civil rights issues, they tend to think of the obvious things: racial profiling, job discrimination, etc. In real life, things are rarely quite so neat. This is a truth that civil rights proponents are well aware of. Lately, many of the higher profile names in this arena have begun to cast their eyes upon the Performance Rights Act (PRA). Politic365 recently did a special report about this, leading off with this quote:

[…] as Rev. Al Sharpton told Politic365, “often it is the quiet bills, the obscure bills, the so-called “specialized” bills, the bills no one seems to know much about, that can hurt Black folks the most if we’re not paying attention.”  A textbook example, according to Rev. Sharpton and other civil rights advocates interviewed byPolitic365, is the “Performance Royalty” legislation that many advocates believe would throw Black radio into a deep tailspin.

Anyone familiar with the ways of Washington is aware of the way that bills are often attached to higher priority legislation in order to pass. It is a daily occurrence on Capitol Hill. In addition, the impact of this legislation on minority-owned radio has long been a bone of contention, inspiring truly bipartisan efforts on both sides of the issue.

But now the heavy hitters from the civil rights scene are weighing in on the legislation and their thoughts on the PRA are not exactly complimentary. Here is another example drawn from the same report:

MMTC [Minority Media and Telecommunications Council] warns that “misinformation is circulating in the civil rights community suggesting that the legislation will not harm minority radio.  In fact, black and Spanish radio would be hit the hardest by this legislation because these stations face the greatest challenges” – including weaker signals, advertising discrimination, and the FCC’s failure to enforce its equal employment opportunity rules.  MMTC reports that it has conservatively estimated that the legislation would throw at least a third of minority owned stations over the cliff into bankruptcy.  The National Association of Media Brokers (NAMB) agrees, adding that “the imposition of a performance royalty on free, over-the-air broadcast stations will be crippling to the broadcast industry in general, and be particularly devastating to minority broadcasters and their audiences, as well as to other new entrants to the industry.”

This is particularly distressing if you take into account the research findings referenced in the Politics365 special report. According to that report, the value of  radio airplay directly translates to approximately $2 billion in annual music sales, and that number excludes radio’s promotional impact on concert and merchandise based income.

Opponents of the Performance Rights Act include civil rights luminaries such as the Rev. Al Sharpton, Dick Gregory, and Tom Joyner. In addition, fifteen members of the Congressional Black Caucus have also expressed their concerns, including Elijah Cummings, Danny Davis, Al Green, John Lewis, Charlie Rangel, and Bobby Rush. That is one impressive roll call if you ask me.

In the end, though, it was Rev. Sharpton who posed the vital question of the day:

“Why in the world would the Democrats at the Commerce Department do this to Black radio – and to radio period?  It doesn’t make sense from a political, social or economic perspective.  If it passes, this bill would have a devastating effect on Black communities.”

What do you think?

Image: marriageequalityCC BY 2.0

Wonkette Sounds Off On Performance Rights Act

April 21, 2010

If by some strange chance you are unfamiliar with the Performance Rights Act (PRA),  just use the search box in the sidebar. I’ll wait here.

It’s been trudging through Congress for a while now and if passed, could spell huge trouble for the radio industry. The thing that is really unique about it is that both the support and the opposition to it are truly bipartisan.

That’s right. I said bipartisan. One of the only instances in modern politics where you are equally likely to find a Republican as a Democrat on either side. Case in point: liberal blogger Wonkette taking Nancy Pelosi to task for supporting this ugly piece of legislation:

Pelosi went to some “advocacy event” hosted by the Recording Academy — makers of the televised witchcraft spectacle the Grammy Awards — to talk about this thing called the Performance Rights Act, which would make radio stations pay some sort of compensation for that musical stuff they play. She said there’s an “army of advocates” in Congress who are working extra-hard to pass this socialists-for-vocalists scheme, because they nothing better to do. Where is America’s “army,” of freedom?

The radio stations are not down with this pro-welfare initiative at all! Because they are already doing enough for Ke$ha and these other music losers by promoting them all the time, for free.

Harsh words, but that is what she is known for. The important thing here is that this is not the standard pattern of modern politics with Left going after Right and vice-versa.  No. Rather, it is an illustration of the fact that this argument is more basic than party loyalties.

While I don’t agree with Wonkette’s classification of musicians as “music losers,” I do thank her for her support. This issue needs more exposure to the general public, and I think that all of us in the industry are thankful for every blogger and every journalist that takes our cause to the public. After all, it is the public that can make a difference by making their opinions known to their representatives.

Image: Wonkette Logo / Fair Use: reporting

Views and News: The Performance Rights Act

April 1, 2010

It’s time to return to the topic of the Performance Rights Act (PRA), the misguided effort of the record labels to save their failing business model at the expense of broadcasters. There were a number of news items over the last month dealing with this contentious piece of litigation, and today I’m going to corral a number of them here for your edification. So here we go, folks!

The PRA was originally put forth by John Conyers (D-MI) who has continually pushed this cause, so it must have smarted a bit early in March when his fellow Democrat from MI, John Dingell, said the following at a National Association of Broadcasters (NAB) event (via Radio Business Report):

[…]  “I’d like to express my opposition to legislation imposing a performance tax on broadcasters. I am concerned that such a tax would be of less benefit to recording artists than to record labels, many of which are based abroad. Further, recording artists and record labels have profited handsomely for years from the free publicity they get from broadcasters, a mutually beneficial relationship that a performance tax will destroy. Lastly, and perhaps most practically, it seems ridiculous to me to impose a new punitive fee on broadcasters during this time of recession, especially as broadcasters have seen their revenues decrease by up to 40 percent over the past several years.”

Now let’s jump over to the Indiana Daily Student out of Indiana University. They bring us a few quotes from small local artists, the kind I purport this will injure the most if it passes. The responses seem to uniformly mirror my own views:

Christopher Reynolds, lead singer and songwriter of the band Strictly Off the Record, said while it is true some rights holders are the artists themselves, these musicians are usually independent and untested.

“Adding any additional fee for every song played is going to make stations unwilling to take risks on unproven artists,” Reynolds said.

Adam Turla, lead singer of the band Murder by Death, said he appreciated the idea of trying to compensate artists, but the act itself “seems kinda like a mess.”

“Radio isn’t a main source of income for mid-level or small level bands, nor would it be if this act passed,” Turla said. “To generate any reasonable amount of money from radio plays you need a single that gets played over and over all over the place.”

How about the view from the station side? Cathy Hughes of Radio One did a great interview with The Altlanta Post in which the PRA was touched upon. Here is a snippet from her perspective:

I’m [against the Performance Rights Act, because] I already spend $14 million a year paying the writers and the publishers. It’s a record company’s job to pay the performers. I don’t even know a performer exists until a record company brings me a finished product! It’s like having to pay child support for a baby that’s not yours. I agree the baby should be supported, but I ain’t the mama! Those artists should definitely be paid by the record companies that are ripping me off. We don’t know even know that Rihanna exists—we don’t even know the girl is born—until the record company walks in and says here is the new release by a new artist named Rihanna.

And then to complete the tour, let’s return to Capitol Hill where we see something amazing bipartisan cooperation. That’s right, a coordinated effort by people from both sides of the political aisle.  A few days ago, a group composed of 63 Republicans and 56 Democrats wrote to their respective party leaders asking that the PRA stays off the House floor both as a stand-alone bill and as an add-on to other legislation. The letter was sent to Speaker Nancy Pelosi (D-CA), and to Minority Leader John Boehner (R-OH).

These letters cite the current economic climate and potential loss of jobs, but that is far from all (via Radio Business Report):

Further, they note that the “primary beneficiaries of the potentially billions of dollars generated under this legislation are the major record labels.” The Reps then note that three of the four are “owned by international entities on foreign shores.”

“Congress should not be enriching one industry at the expense of another,” they argued, “particularly when it could put thousands of American radio jobs at risk, harm local radio stations and hurt our communities who rely on radio for news, weather and emergency alert information.”

They also mention the 254 House Members who have signed on to the Local Radio Freedom Act in opposition to PRA. That number has since risen to 260.

Let us hope that the party leadership listens to this missive. The purely bipartisan nature of the request alone should make any smart politician sit up and take notice in an era where vitriol and obstructionist politics are the norm. I would think that this is a great opportunity to show that the Left and the Right can collaborate, something that would enhance the public view of both sides.

One last note: the aforementioned letter includes something I consider vital. As anyone who follows politics can tell you, a lot of legislation is made by attaching it to “must pass” bills coming across the floor. The abjuration against it being allowed as an add-on is amazingly important for that reason. Contact your Representatives and tell them to stand up against the Performance Rights Act!

Image: Seal of US House of Representatives / Fair Use: Public

Additional Royalties: Still Unjustified

March 5, 2010

Okay, folks. Brace yourselves, as today I will be opinionated. There is a lot flying around the media about the Performance Rights Act (PRA), or as our sponsors at the National Association of Broadcasters (NAB) call it, the Performance Tax.  One of the most common assertions of those who support it is that the money collected goes to the artists. That’s not quite so accurate, as it turns out.

A lot of big names in music have stepped up to support the PRA, most recently Dionne Warwick, who personally lobbied Congress in support of the legislation. Big names, indeed. Funny, isn’t it, how no one of less than millionaire standing seems to support this. Why is that?

Could it be because there is no fonder ambition for most up-and-comers than to get some airplay? I think so. That promotion is vital, and is marked by increasing stages of success: local airplay, regional airplay, and national airplay. It has always been, and continues to be, the chief means of discovering new music.

Now, I’m sure there are those among you shaking your heads and thinking that I am “corporate shill” as you read this. I beg to differ. I spent several years in New Orleans working as a promoter of grassroots-level art and music. I’ve had the pleasure of working with bands ranging in genre from bluegrass to death metal. Most of my work in radio has been at either college or community stations. I’m about as far from a “corporate shill” as you can get.

What I do have is perspective gained from watching band after band shooting for airplay. Too many of the high-profile supporters of the PRA desire performance royalties. To unsigned bands, it creates a barrier. As a station manager responsible for the bottom line, would you be as willing to be adventurous in your choice of playlist if you had additional fees to deal with? Probably not, especially during economic times like these. As a result, it becomes harder and harder to break new music. Sounds like it really helps the artists, doesn’t it?

I agree wholeheartedly with Corey Dietz in his recent column on About.com’s Radio section:

Most struggling bands would kill to receive substantial radio airplay which solidifies the standing of a band or artist on a national scale. In this respect, the trade between radio airplay and not having to pay the performer a royalty is more than justified. That’s just my opinion – you can leave yours below.

Nashville and the Performance Rights Act

February 22, 2010

Hello, all. Sorry to be back online a day or two late. I got stuck with a pretty severe case of the flu which has kept me from being able to write. Now that I am back, I’d like to steer your attention to the great state of Tennessee, home of that country music powerhouse Nashville!

Being an epicenter of the music industry, Nashville has a lot on the line in the current battle over the Performance Rights Act (PRA). Whit Adamson, President of the Tennessee Association of Broadcasters, feels strongly enough about the subject that he addressed the issue and the public directly in the pages of The Tennessean:

For over 80 years, radio broadcasters have had a mutually beneficial relationship: free radio airplay of music by over-the-air broadcasters, which in turn promotes record labels and artists and generates millions of dollars in music, hospitality, small-business and merchandise sales. Yes, the Grammy Awards and other single night ceremonies like the Country Music Awards are terrific showcases for Nashville’s music. But let’s not forget that all over America, local radio stations do this every single day!

Free, local radio reaches 236 million listeners every week — which vastly dwarfs the promotional value of artist airplay on all of the other music platforms like satellite radio, Internet radio and other subscription-based radio that pay this fee.

And it is usually at about this point in the discussion that those supporting the PRA point out what they consider the glaring inequity of broadcast not having to pay. An argument, like many of those on the other side of the fence, that means little due to its skewed presentation. Radio does indeed pay, just not this additional burdensome fee being proposed by the labels. Adamson continues:

It’s important to note that our radio stations currently pay hundreds of millions of dollars annually to groups like BMI, ASCAP and SESAC, which goes to compensate songwriters and Nashville music publishers. We recognize that songwriters have less opportunity to monetize their work than do the performing artists.

There lies an important and often ignored distinction. Radio has always supported songwriters and publishers, the people who create the music (sometimes the same people as those performing it, but far from always).  Performers have concert receipts to generate income, as well as other avenues such as merchandising. The songwriters, not always as much. While the singer/songwriter is an American icon, a quick check of the liner notes on most CDs will show that it is not by any stretch the majority.

Adamson loses with the following abjuration, one with which I agree:

For the sake of our region and the future of music, we should not risk the viability of free and local radio stations that have been such a huge economic engine for Nashville over the decades.

Image: jimbenttree / CC BY 2.0

Royalties in Mind: C-Span The Communicators

October 7, 2009

cspanExcitement is not the word that usually comes to mind when people think about C-Span. This weekend, however, there was excitement to be had, at least if you have an interest in radio. Steve Newberry, Joint Board Chair for the National Association of Broadcasters (NAB) and Commonwealth Broadcasting President/CEO, appeared on The Communicators and his topic was the Performance Rights Act.

Mr. Newberry expressed an opinion that I share, that the recording industry is completely invested in a failing business model and are attempting to stop the financial hemorrhage by coming to broadcasters with their hands outstretched. If that were not the case, then why is it that 50% of the royalties collected are supposed to go into studio coffers as  opposed to being distributed to the artists?

He also addressed one aspect of the ongoing argument that is left by the wayside way to often: our responsibility to the next generation of performers. Radio Ink delivers the direct quote:

“But if we do see [performance royalties] happen, and radio stations are forced to pay, I think that one of the unintended consequences could very well be that it becomes a pure business transaction, and radio stations are forced to do one of two things: expect compensation or a pure business investment, a return on my investment. If I am paying … you’d better believe that I am going to be much less willing to take a risk on new artists or unknown artists, and I am going to play those that have the most consistent performance recognition. And you could see the new and evolving artists really take it on the chin.”

When you look around at the complaints levied at commercial radio, one of the most often seen is the assertion of a lack of variety. True or false, this is a mere glimpse of what the musical future could be like in the wake of this sort of financial juggling. If stations are no longer willing, or no longer able, to afford to take chances on new music, then the artists that the Performance Rights Act purports to benefit will be muzzled over the long run.

This is setting up our creatives for failure, just to provide a few pieces of silver for the labels. Yes, there are inequities in the way things are now, but if you do a little digging, you will find that the majority of the horror stories come from artist interactions with their labels, not with radio. I believe that the family of Jimi Hendrix is only one out of many that would attest to this.

The C-Span piece can be watched online, and also includes Duke Fakir, an original member of The Four Tops, as the proponent of the act. One of his main supporting arguments is that Internet and Satellite already pay performance royalties and since they’re just the same as radio, broadcast should as well. I find this argument to be invalid. The royalties paid by these two types of media were originally brought about on the grounds that both Internet and Satellite “radio” were in fact completely new and different species of media and in need of a new structure. Sorry, but you can’t have it both ways.

Image: C-Span Logo / Fair Use: Reporting

Senator Barrasso: Radio Booster

September 30, 2009

225px-Sen._John_Barrasso_Official_Portrait_7.17.07One of the chief sponsors of the Local Radio Freedom Act, Sen. John Barrasso (R-WY), was a surprise guest at Friday’s Radio Luncheon at the Philadelphia National Association of Broadcasters (NAB) Radio Show. His pledge to fight the RIAA’s push for collecting royalties from broadcast radio was greeted with excitement by the crowd according to all reports.

The former orthopedic surgeon joined Sen. Blanche Lincoln (D-AR) in introducing S. Con. Res. 14 in this session of Congress. This is the Senate counterpart to H.R. 848 in the House of Representatives, both entitled the Local Radio Freedom Act. The  resolution now has 23 co-sponsors, bringing the total supporter count to 25. While encouraging, these numbers are far from the majority support that the Local Radio Freedom Act enjoys in the House.

Radio Business Report shares some of the quotes from that day:

“Radio does so many wonderful things in our communities,” said Sen. Barrasso. And he doesn’t want to see that diminished by a new financial burden for local broadcasters.

“I’m going to continue to fight to ensure that your voices are heard,” he vowed, to great applause and a standing ovation.

Barrasso began, by the way, with a tip of the hat to a former colleague, the new President and CEO of the NAB, sitting a few feet from the podium. Barrasso said it had been a loss to no longer have Gordon Smith in the Senate, but that he is “a great gain for the NAB.”

While the first reaction is elation, we must be vigilant; the battle is far from over. Right now, as observed by the Radio Business Report, supporters of the proposed royalty structure are scanning incoming bills looking for that piece of must-pass legislation that they can try to tack performance royalties onto. Then it is simply a matter of eroding the broadcaster support for the Local Radio Freedom Act in the face of a perceived larger issue. Students of government will hardly be surprised by this approach; it happens frequently in our nation’s capitol.

So the news is good, but we are not out of the woods as yet. Keep contacting your local senators; they need to have it firmly impressed upon them just what is at stake here!

The United States Congress image above is in the public domain.

RCA VP Peter Gray Talks Up Radio’s Importance

August 27, 2009

nipperOther than being recording artists, what do the Kings of Leon, Alicia Keys and Kelly Clarkson all have in common? They work with a Milwaukee, WI, native named Peter Grey who is the VP of pop promotion at the RCA Music Group.

I stumbled upon an interview with him at the On Milwaukee website recently and would like to share some of his perspective on radio, as perceived from a promotions standpoint. Managing editor Bobby Tanzilo, who incidentally is part of a great band called The Yell Leaders, did the interview. As is to be expected when a home town boy is at the mic, a lot of it centered on his roots and ties in the Milwaukee area. Then came the part that made me sit up and take notice, when he began to touch on radio.

It all starts with his response to a query as to what his job is like on a day to day level:

There are indeed some glamorous and rewarding moments, but the primary function of a record label’s promotion department is to secure radio airplay for its artists. We rely on our relationships with music programmers at all contemporary radio formats, nationwide — Top 40, Urban and Urban Adult, Hot AC and Mainstream Adult, Rhythm, Alternative, Active Rock, Rap, Dance, College radio, Smooth Jazz, etc. Our partnership with radio is paramount to breaking new acts, as well as keeping superstar artists in the eyes and ears of their fans and the music buying public.

Mr. Grey then proceeds to talk about other aspects of the process and more about Milwaukee for awhile. It’s a quite engaging interview. The reason I want to share this is because it shows that the labels, or at least his label, are well aware of the value they derive from airplay. As the battle over the additional royalties requested by the Recording Industry of America (RIAA) continues, candid moments like this reveal themselves.

It also lends credence to my oft-stated opinion that they should have to purchase airtime if it were not for the fact that doing so would damage the industry as much as or more than the “performance tax” itself. At one point no one knew who Kelly Clarkson, Daughtry, David Cook, Alicia Keys, Gavin DeGraw and Leona Lewis were, but then they got a lot of airplay…

Image: walkadog / CC BY 2.0

Performance Rights Act: The Voice of Reason

June 11, 2009

microphoneReason Online is the self proclaimed magazine of “free minds and free markets.” In their own words:

It covers politics, culture, and ideas through a provocative mix of news, analysis, commentary, and reviews. Reason provides a refreshing alternative to right-wing and left-wing opinion magazines by making a principled case for liberty and individual choice in all areas of human activity.

As you may imagine a wide variety of interesting things turn up there, and today was a great day for that. I just stumbled across one of the most eloquent columns addressing the Performance Rights Act that I have yet read. Jesse Walker, managing editor of Reason and author of Rebels on the Air: An Alternative History of Radio in America (New York University Press, 2001), holds forth eloquently on aspects of the issue that are usually distorted or shunted into obscurity.

One of my favorite bits of myth-busting is when he talks about the oft presented argument that radio should not be exempt since webcasters are not. Walker points out the crucial background of that assertion:

But it’s not as though this is an inexplicable inconsistency in the law. The disparity didn’t exist until 1995, when Congress passed the Digital Performance Right in Sound Recordings Act at the behest of the very forces that now decry the separate-and-unequal system that bill created. W. Jonathan Cardi, an assistant professor of law at the University of Kentucky, summarized the record industry’s argument for the act in a 2007 article for the Iowa Law Review:

without some ability to control the digital performance of their recordings, they would be less able to prevent infringements of their existing reproduction, distribution, and derivative work rights. The labels maintained, for example, that if online services could freely transmit recordings in any manner they pleased, such performances would facilitate the creation of infringing reproductions on users’ computer hard drives.

Set aside the question of whether those claims were accurate. For our purposes, the most important fact about the labels’ argument is that it hinged on the idea that digital broadcasting is different from conventional broadcasting. Fourteen years later, as it attempts to impose a performance fee on AM and FM broadcasters as well, the industry now wants to claim the channels are equivalent after all.

He then goes on to point out the glaringly obvious question of payola. If the air time is valuable enough that record companies have consistently paid for preferential treatment despite its illegality then why should the station start paying them?

Other practical considerations that will have a rather chaotic ripple effect if this gets passed include the increased workload and cost of record keeping as dictated by the Copyright Royalty Board. This alone would add a significant indirect cost to the total of the proposed fee. While smaller fees, as recently agreed to, will be levied on non-commercial radio, the expense of this bookkeeping could easily add thousands of dollar in cost to their already strained bottom lines.

I’ve enjoyed Mr. Walker’s work in past when reading it in The New York Times, The Wall Street Journal, The Washington Post, Salon, or The New Republic. He utterly fails to disappoint with this one. If you are self-educating on the issue, or if you wish to marshal your pro-radio argument before contacting your congressperson, this is a must read. Go ahead, check out The Man Can’t Tax Our Music: The Music Industry Wants to Impose Onerous New Fee on Broadcasters, you’ll be glad you did!

Jesse, thanks for that!

Photo courtesy of Duchamp, used under its Creative Commons license