Opposition Mounts to “Performance Tax”

It is no secret that the Recording Industry Association of America (RIAA) is on the warpath against radio, the medium that has driven more sales for them than any other. After over eight decades of radio promoting music for free, the RIAA is seeking to enhance their diminishing bottom line by creating a new revenue stream in a way that will injure radio, particularly minority and niche stations.

In my time, I have been a radio DJ and an independent music promoter in one of the most musical cities on the planet: New Orleans, Louisiana. I have had the pleasure of working with high profile artists like James Brown and Herbie Hancock as well as up and coming groups like Johnny Sketch and the Dirty Notes. One common thread in my interactions with all of these artists has been that airplay is massively important to them. Without the distribution channel provided by radio, audiences would have a vanishingly small chance of running across their work, much less becoming “true fans” who consistently purchase their music.

HR 848, The Performance Rights Tax, has potential to cause palpable harm to stations, particularly the smaller and independent ones. The disturbing thing is that a solid 50% of the revenue generated will go directly to the labels as opposed to the musicians the RIAA purports to serve. Facts like this are understandably glossed over in the RIAA’s quest to have this tax enacted.

In the interest of providing the facts of the matter, our colleagues at the National Association of Broadcasters (NAB) have launched NoPerformanceTax.org, a website devoted to providing information and resources about this struggle. Resources include video of the Congressional testimony of Steven Newberry and Larry Patrick before the U.S. House of Representatives; great public-service audio spots against the tax; ads and link buttons you can put on web sites or in printed publications.

If HR 848 gets passed, we will see a major curtailing of radio offerings across the board. The tax is being vigorously opposed by religious and minority groups, including the National Association of Black-Owned Broadcasters and the Spanish Broadcasting Association. This tax would likely force many small market stations to close, reducing local content and weakening the emergency broadcast system. That last one fills me with dread; as a survivor of Hurricane Katrina, I have a very personal view of radio’s essential nature during time of disaster. It’s a view that is shared by many people across the country who have suffered floods, tornados, wildfires, or the terrorist attacks of 9/11.

Go check out NoPerformanceTax.org and join the battle to keep the airwaves vibrant and alive. Oppose the tax on local radio — the next generation of talent will thank you!

Photo courtesy of the Rick Harris, usd under its Creative Commons license

House of Reps Signs Local Radio Freedom Act!

Anyone involved in the industry is quite well aware of the ongoing tug of war between the RIAA and the radio industry concerning whether or not fees should be paid to performers by the radio stations that air their music. The root argument is as follows:

• RIAA – Broadcasting music without payment is piracy.
• NAB – Airplay drives sales creating profit for the artists though exposure.

Now, that is a gross oversimplification, but it makes a good stating point. On a personal level, I think the consistent lurking presence of payola throughout the history of radio shows that the recording industry is well aware of the impact radio has on their revenues and their artists’ careers. If the airtime is not of value why break the law to get more? (Note: I’m not making any accusations of payola in the current industry, just noting the frequency with which it has reared its ugly head throughout the history of radio.)

Larz, of the Chicagoland Radio and Media Blog Site, shares a bit of data that is highly pertinent to the debate, a study that proves radio’s value in hard sales figures.

Via Larz:

[…] a study this week revealed that Radio generates billions of dollars for the Music Industry. The study was done by former Stanford economics professor, Dr. James Dertouzos, who found that radio airplay brings in between $1.5 billion to $2.4 billion in annual music sales to the Recording Industry. The study, entitled “Sales vs Spins” used data from both Nielsen and Pollstar. In a series of line graphs, the data showed clearly that the when a song is played on the radio, record sales quickly go up. Music airplay (aka “spins”) and sales were analyzed for 17 artists covering many different genres and varying levels of success, including U2, Velvet Revolver, Josh Groban, Rascal Flatts, Green Day, Bruce Springsteen, The White Stripes, Taylor Swift and Linkin Park. The analytical study focused only on album sales and legal digital track downloads from 2004 to 2006 in the 99 largest American markets.

The monetary value of radio play could be even double what was mentioned above! The study did NOT take into account radio’s impact on licensing revenue or merchandise sales. It also did NOT factor radio airplay’s promotional role in increasing concert ticket sales. It also did NOT take into account music played on satellite radio or HD radio — this was only based on terrestrial, free radio airplay. Clearly, there is no better friend to the music industry than radio.

I agree with Larz. In my music production days, I worked with artists ranging from James Brown to unknown grass roots acts of all genres. By and large, the bigger names tended to attribute a large part of their success to airplay, and for the smaller groups just starting out, getting on the radio was always cause for celebration.

I used to run a non profit production company here in New Orleans, geared towards acting as an incubator for local acts, so I am not just some industry clone with a carbon copy opinion cut from the party line. I have put in hours upon hours in trying to give grassroots music a leg up over the years. Groups that are starting out need the exposure radio can provide. It is the first step on the path to every musician’s dream of being a “big star.”

It is nice to see that this fundamental aspect of the overall music industry is appreciated in the US House of Representatives. I just stumbled onto a bit of breaking news from the House floor while writing this.

Via FMQB

The National Association of Broadcasters (NAB) reports that four additional House members have signed on to the Local Radio Freedom Act, which opposes a performance fee for radio stations for the music they play. The Congressional opposition now stands at 219, representing a majority of the 435-member U.S. House of Representatives. The newest lawmakers to co-sponsor the resolution are Reps. Robert Andrews (D-NJ), Chaka Fattah (D-PA), Stephen Lynch (D-MA) and Carolyn McCarthy (D-NY).

“Today’s announcement sends a powerful message to foreign-owned record labels that Congress is not falling for their bogus campaign to blame local radio stations for their financial woes,” commented NAB EVP Dennis Wharton. “NAB thanks those members of Congress who appreciate the fact that free radio airplay of music generates untold millions into the wallets of performers and record labels. We will continue to educate policymakers on the devastating impact this RIAA tax would have on America’s hometown radio stations.”

Image courtesy of …..dotted….., used under its Creative commons license