Issue
In recent years, at the behest of the big record labels, legislation has been introduced in Congress to impose a performance fee, or tax, on local radio broadcasters. A performance tax would impose a devastating new government mandated fee on local stations simply for airing music on the radio, which 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 harming the listening public who rely on local radio.
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 are unalterably opposed to a performance tax. In both the 111th and 112th Congresses, NAB worked with bipartisan leaders in both chambers to introduce the Local Radio Freedom Act – a resolution to oppose the performance tax. The resolutions received hundreds of cosponsors, legislators who stood up for their free, local radio stations. Although performance tax legislation has not been introduced in the 113th Congress, H. Con. Res. 16, the Local Radio Freedom Act, was introduced again this Congress by Reps. Mike Conaway (TX-11) and Gene Green (TX-29) in the House of Representatives. In the Senate, companion legislation, S. Con. Res. 6, was introduced , by Sens. John Barrasso (WY) and Heidi Heitkamp (ND). These resolutions are expected to attract broad bipartisan support as in previous Congresses.
NAB has demonstrated good faith in working with the record labels to try to solve the performance tax issue through private discussions. NAB’s radio leadership endorsed a solution, but musicFIRST, representing the record labels and performers, rejected the compromise. 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 nearly 243 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 to 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 tax legislation hurts the local radio stations that communities depend on for entertainment, local news and vital information during times of crisis. Recent private agreements between certain broadcasters and record labels that compensate artists for Internet and over-the-air play demonstrate that this issue is more appropriately addressed through private sector resolution rather than a government mandate.
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 nearly 243 million Americans who rely on local radio each week.
