U.S. Sen. Blanche Lincoln has issued a news release about her opposition to legislation that would end the practice of letting radio stations play music without compensation to the musicians. Rights payments now go just to song writers and publishers.
Here's a Los Angeles Times backgrounder.
The bill making its way through Congress would require AM and FM stations to pay fees, to be split evenly between the artists and copyright owners. The annual flat rate would be calculated according to a radio station's revenue, with the smallest paying $500 a year, medium-size stations paying as much as $5,000 and the largest paying more.
But foes of the legislation -- including the National Assn. of Broadcasters, which represents about 6,500 radio stations -- say airplay gives "promotional value" to artists because radio reaches more than 235 million listeners a week, providing free advertising that produces $1.5 billion to $2.4 billion in music sales annually.
Broadcasters' opposition to the bill also comes as radio stations, collectively accustomed to earning billions each year, are losing ad revenue.
The legislation has been approved by Democratically controlled committees in the House and Senate. Lincoln's description of the radio industry as something of a friendly mom-and-pop business doesn't square with highly concentrated chain ownership, the end of local news and information on most stations and the strictly controlled editorial viewpoints on stations that do provide some informational content.
LINCOLN NEWS RELEASE
Washington – U.S. Senator Blanche Lincoln (D-Ark) is stepping up her fight on behalf of Arkansas’s radio broadcasters and the communities and families they serve.
In a letter to Senate leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.), Lincoln calls on them to oppose any efforts to move forward the “Performance Rights Act,” a bill Lincoln says would have a “devastating impact on the local radio broadcasting system as we know it.” The bill would require local radio stations to pay the recording industry for the music that is provided to local listeners free of charge. By many estimations, passage of this legislation would result in potentially billions of dollars flowing from local broadcasters to the recording industry.
“As a rural state, Arkansans depend on our radio stations for local news,” Lincoln said. “The performance tax would cost Arkansas’s radio stations more than $9 million a year, threatening the stability of our local businesses that are not only the source of important information, but also the source of jobs and financial support in our communities. Businesses and families already are struggling through this tough economy, and the performance tax further threatens our local radio industry and the quality programming it provides.”
Lincoln is the author of the “Local Radio Freedom Act,” a resolution that recognizes the promotional value provided to musicians and record labels through free airplay on local radio stations across America.
“Senator Lincoln has long realized that Arkansas broadcasters play an important role in their local communities by donating public service time, providing news, weather and emergency information and providing jobs,” said Jim McCall, executive director of the Arkansas Broadcasters Association. “She has been a strong advocate on our behalf and we’re very appreciative of that support.”
McCall added the Performance Rights Act is “the biggest threat to radio in 50 years.”
“The millions of dollars in annual performance fees could prompt stations to lay off workers, decrease charitable donations, convert to all-talk formats or go dark,” McCall said. “Local broadcasters should not be taxed for playing music over-the-air to subsidize the failing business model of the foreign-owned record label conglomerates.”
A copy of the text of Lincoln’s letter is below.
October 16, 2009
Dear Leaders Reid and McConnell:
We are writing to you to raise our concerns regarding S. 379, the “Performance Rights Act,” which was voted out of the Judiciary Committee yesterday. This bill would require local radio stations to pay the recording industry for the music that is provided to local listeners free of charge. By many estimations, passage of this legislation would result in potentially billions of dollars flowing from local broadcasters to the recording industry and would have a devastating impact on the local radio broadcasting system as we know it.
As you know, throughout our country, businesses are struggling to navigate volatile economic waters. This is especially true with regard to local over-the-air radio stations, which have been hit by both long-term systemic declines in revenue and an even more dramatic pull back in advertising dollars as a result of the current economic environment. The results are chilling. Over 265 stations have gone off the air in just over a year. Thousands of jobs within the radio industry have been lost, and a number of broadcast owners (from small single stations to large radio companies) are teetering on the verge of bankruptcy. The economic challenges facing the radio industry are daunting, but an even graver threat to free radio’s future is currently being pushed in the form of new performance fees levied by S. 379.
We believe that artists and their labels are currently more than fairly compensated by local radio stations in the form of free and unparalleled promotion. Free radio reaches over 235 million potential music consumers each week. These listeners hear a song on the radio and then go on to purchase CDs and music downloads, buy concert tickets, and purchase other merchandise that goes directly to the artists and their labels. Without radio exposure, there would be far less music consumption in this country. In fact, a recent economic study found that radio airplay alone generates up to $2.4 billion in music sales annually. It is for this reason that the recording industry spends untold millions of dollars simply to promote their music to radio stations in the hope of securing airplay.
The system currently in place works to the benefit of both the recording industry and local radio stations. Radio receives free use of music which is broadcast to the public free of charge. Similarly, through radio airplay, the recording industry receives free “advertising” of its music on a level that cannot be matched by any other platform. If this fee is levied against local radio stations, it would turn a mutually beneficial partnership into an unfair where radio stations pay the labels for the privilege of promoting their songs.
Imposing this fee on local broadcasters would fundamentally change free radio. Simple economics would dictate that many more stations would be forced out of business. More and more stations would likely switch to cheaper talk radio formats. And those stations that do continue to play music would inevitably focus on more streamlined play lists that feature only the most proven artists. At the end of the day, this will result in less music being played on the radio. Further, should this fee be imposed on free radio, it is only a matter of time before other businesses such as restaurants, bars, taxi cabs and hotels are forced to pay for their use of music. This legislation is not in the interest of local radio stations, local listeners, local communities, and ironically, it’s not in the interest of most artists who would lose their best opportunity to get their music out to the public.
Finally, thousands of local radio stations are located in disaster-prone states, where the reliance on local radio can literally be a life-saving matter because radio stations serve as a “first responder” in times of emergency. Weakening local radio stations could impact the ability to respond during the all-too-often natural disasters and national emergencies which ultimately harms local listeners and their local communities.
Without such a performance fee, the United States remains the music capital of the world, and Americans enjoy a radio broadcasting system that is second to none. We want to protect America’s dominance in both music and radio broadcasting, and that is why we have introduced S. Con. Res. 14, which rejects the introduction of a performance fee on free radio. We are pleased to have the support of 24 bi-partisan Senators as co-sponsors to our resolution. A similar resolution in the House (H. Con. Res. 49) enjoys support from 251 cosponsors, well over a majority of that body’s membership. It is this same sentiment that has generated well over 100,000 letters to Congress from local radio listeners opposing the performance fee.
This legislation clearly evokes strong opposition that transcends party affiliation. As leaders of our two parties, we ask that you oppose any effort to move this bill, either as a stand alone measure or as part of a broader legislative package.
Senator Blanche Lincoln
Senator John Barrasso, M.D.