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A Performance Tax Threatens Local Jobs

ISSUE SUMMARY

Congress should not mandate a performance tax on free, local radio stations that would jeopardize local jobs, prevent new artists from breaking into the recording business and harm the more than 268 million Americans who rely on local radio.

Broadcasters urge legislators to stand up for their local radio listeners by supporting the Local Radio Freedom Act, which opposes a performance tax.

Here's why:

For nearly a century, record labels and performers have thrived from radio airplay – which is essentially free advertising – from local radio stations. But as the big record labels struggle to keep profit margins high, they are urging Congress to impose a tax on local radio stations that are, ironically, their greatest promotional tool.

In previous Congresses, legislation backed by the record labels was introduced to impose a new fee on local radio stations, simply for airing music on the radio. A performance tax could financially cripple local radio stations, harming the millions of listeners who rely on local radio for news, emergency information, weather updates and entertainment every day.

Radio's free promotion is worth more than $2.4 billion annually in music sales, concert tickets and merchandise to record labels. Here’s how:

  • Local radio continues to be the top source for listeners seeking new music, far surpassing other sources.
  • Free radio airplay provides the recording industry increased popularity, visibility and sales for both established and new artists.
  • Promotion by local radio goes beyond the music to include concert and festival promotion, on-air interviews and social media marketing.

Recognizing the promotional value of free radio airplay, Congress has repeatedly rejected the record labels’ attempts to impose a harmful performance tax on local radio stations.

The Local Radio Freedom Act (H. Con. Res. 13 and S. Con. Res. 6), which opposed any new tax, fee or royalty on local radio stations, has strong bipartisan support in the 115th Congress with more than 110 cosponsors.

In previous Congresses, broadcasters demonstrated good faith in working with the record labels to try to resolve the performance tax issue through private discussions. Yet musicFIRST, representing the big record labels and performers, rejected compromise and walked away from negotiations. Since that time, numerous radio companies and record labels have negotiated private deals of their own that compensate copyright owners and performers, demonstrating the ability of the marketplace to best address the issue.