In recent years, at the behest of the big record labels, legislation has been introduced in Congress to impose a government-set performance fee, or tax, on local radio broadcasters, simply for airing music on the radio. Ironically, radio is the number one promotional tool for record labels and performers. A performance fee could financially cripple local radio stations, putting jobs at risk, stifling new artists trying to break into the business and harming 243 million Americans who rely on local radio. Moreover, a number of recent private deals between radio companies and record labels to compensate performers prove thereâ€™s no need for government regulation.
Recognizing the promotional value of free radio airplay, Congress has repeatedly rejected the record labelsâ€™ attempts to impose a performance tax on local radio stations.
Broadcasters are firmly opposed to a congressionally mandated performance fee, and have worked with bipartisan leaders in the House and Senate to once again introduce the Local Radio Freedom Act – a resolution to oppose congressional regulation on this issue. In the 113th Congress, the legislation – H. Con. Res. 16, introduced by Reps. Mike Conaway (TX-11) and Gene Green (TX-29) and its companion S. Con. Res. 6, introduced by Sens. John Barrasso (WY) and Heidi Heitkamp (ND) – has garnered more than 170 cosponsors.
Broadcasters demonstrated good faith in working with the record labels to try to solve the performance tax issue through private discussions, but musicFIRST, representing the record labels and performers, rejected our compromise and walked away from negotiations. Since that time, however, numerous radio companies and record labels have negotiated private deals that compensate performers to the satisfaction of all parties.
In September, Rep. Mel Watt (NC-12) introduced a bill to allow record labels to levy a fee on local radio stations for airing music. Broadcasters are strongly opposed to this legislation, which is unnecessary especially in light of recent marketplace deals.
For more than 80 years, record labels and performers have thrived from radio airplay – what is essentially free advertising – from local radio broadcasters. Free, broadcast radio touches nearly 243 million listeners a week, a number that dwarfs the reach of Internet and satellite radio.
A 2013 survey found that AM/FM radio is the top source for those seeking to learn about new music, far surpassing online and other sources. Free radio airplay provides the recording industry increased popularity, visibility and record sales. The promotion by local radio does not just include the music; it includes concert promotion, on-air interviews and online and social media marketing.
The fact is, the big record labels find themselves struggling economically and are seeking to recoup revenues on the backs of local radio stations that are, ironically, their greatest promotional tool.
Performance fee legislation would hurt the local radio stations that communities depend on for entertainment, local news and vital information during times of crisis and would put jobs at risk. Recent private agreements between broadcasters and record labels that compensate artists and copyright owners for Internet and over-theair play demonstrate that this issue is being addressed through private sector agreements and that government intervention is not necessary.
Congress should not mandate a performance fee on free, local radio broadcasters that would jeopardize local jobs, prevent new artists from breaking into the recording business and harm the nearly 243 million Americans who rely on local radio each week.