Issue
During the past two Congresses, at the behest of the big record labels, a bill was introduced to impose a performance fee, or tax, on local radio broadcasters. The Performance Rights Act would have imposed a devastating new government mandated fee on local stations simply for airing music on the radio – airing the music that provides free promotion to the labels and performers. A performance tax could financially cripple local radio stations putting jobs at risk, stifle new artists trying to break into the recording business and harm the listening public who rely on local radio. To date, no performance tax legislation has been formally re-introduced in the 112th Congress, although Rep. Nadler (NY-08) recently circulated a draft bill to the same effect.
History
Recognizing the promotional value of free radio airplay, Congress has repeatedly rejected the record labels' attempts to impose a performance tax on local radio stations.
NAB and broadcasters have been, and continue to be, unalterably opposed to the Performance Rights Act since it was first introduced in 2007. In the 111th Congress, NAB worked with Reps. Gene Green (TX-29) and Mike Conaway (TX-11) and then-Sen. Blanche Lincoln (AR) and Sen. John Barrasso (WY) to introduce the Local Radio Freedom Act in the House and Senate, resolutions to oppose a performance tax on local radio stations. More than 300 members of the House and Senate cosponsored these resolutions. In the 112th Congress, the Local Radio Freedom Act was again introduced by Reps. Conaway and Green in the House, and Sens. Ben Nelson (NE) and John Barrasso in the Senate. These resolutions are cosponsored by 197 members of the House and Senate.
In August, Rep. Jerrold Nadler (NY-08) circulated for comment a draft performance rights royalty bill that would instruct the Copyright Royalty Board (CRB) to account for the lack of a royalty for terrestrial radio play when setting webcasting rates. The bill also requires the CRB to apply the same criteria when setting artist royalty rates for music played over satellite radio, Internet radio, and terrestrial radio. NAB voiced strong opposition to Rep. Nadler's bill, and NAB will continue to make all efforts to ensure that any legislation in this area does not gather momentum. Recent private agreements between certain broadcasters and record labels that compensate artists for both Internet play as well as over-the-air play demonstrate that this issue is more appropriately addressed through private sector resolution rather than a government mandate.
NAB remains opposed to any legislation that imposes a performance tax on local radio broadcasters. In February 2010, at the request of congressional leaders, we began a constructive dialogue with musicFIRST – the organization representing artists, record labels and unions – in an attempt to resolve the longstanding performance tax issue and shape a positive outcome for the radio industry. In October 2010, after months of discussion and feedback from the radio industry, NAB's Radio Board of Directors endorsed a solution, which was presented to musicFIRST. While no agreement was reached with the music industry, NAB's proposal demonstrated a good faith effort to resolve the performance fee issue. NAB remains open to maintaining discussions; however, we will continue to fight any performance tax legislation on Capitol Hill.
NAB Position
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 241 million listeners a week, a number that dwarfs the reach of Internet and satellite radio. Free radio airplay provides the recording industry increased popularity, visibility and record sales. In fact, 85 percent of listeners of all audio services identify radio as the place
they first heard new music. The promotion by local radio does not just include the music; it includes concert promotion, on-air interviews with bands and ticket and CD giveaways.
Today, the record labels find themselves struggling because they have failed to adapt their business model to the digital age. While their business model suffers, they seek to recoup revenues on the backs of local radio stations that are, ironically, their greatest promotional tool. The value of free radio promotion to record labels and performers is well recognized.
Performance Rights Act legislation hurts the local radio stations that communities depend on for entertainment, local news and vital information during times of crisis. Broadcasters are engaged in a good faith effort to resolve this issue in the best interests of both radio and the music industry.
Action Needed
Congress should not mandate a performance tax on free, local radio broadcasters that would jeopardize local jobs, prevent new artists from breaking into the recording business and harm the 241 million Americans who rely on local radio each week. Members should cosponsor H. Con. Res. 21 and S. Con. Res. 7, and oppose any new government mandated performance tax, fee or royalty on local radio stations, including Rep. Nadler's bill.
