Performance Tax Frequently Asked Questions

What is a performance tax or fee?
Ironically, for more than nearly a century, local radio stations have made stars out of unknown artists, simply by playing their music. It's a relationship that has thrived - radio provides the music their listeners seek and artists' voices get to be heard by millions of fans.

Struggling with outdated business models, the record labels have resorted to pushing for legislation, which would impose a performance tax or fee on radio stations simply for airing and promoting artists' music.

Where does the money go?
In short, the money would flow out of your community and into the pockets of the record labels – the great majority of which are foreign-owned. The record labels would like for you to think this is all about compensating the artists, but in truth the record labels would get at least 50 percent of the proceeds from a fee imposed on local radio.

How does this affect me?
If you're one of the 268 million people who listen to radio each week, this fee could reduce the variety of music radio stations play, and all but eliminate the possibility of new artists breaking onto the scene. It could particularly affect smaller, minority-owned stations, some of which may have to switch to a talk-only format or shut down entirely.

It also affects your community. Radio stations are major contributors to public service – generating $6 billion in public service annually and providing vital news and community information and free airtime to help local charities. If a tax were imposed, stations' critical public and community service efforts could be reduced.

And worst of all, if you're one of the 125,000 Americans employed by local radio your job could be in jeopardy. In the economic environment, the last thing local radio needs is to be hit with a fee that some analysts estimate could be $2-7 billion annually.

Doesn't radio already pay for music?
Radio compensates composers and songwriters to the tune of about $550 million annually. It's widely understood that songwriters do not have the same name recognition to financially exploit themselves to make money. Performers make money from touring and personal appearances, merchandise and other licensing and branding opportunities like perfume and clothing lines.

Congress has continually recognized that local radio is different and should not be subject to such a fee. Local radio is free, so everyone, regardless of income, can have access to it. Local radio also has to fulfill certain "public service obligations" that other platforms do not. And importantly, the free music that radio plays provides free promotion that translates to as much as $2.4 billion annually in music sales for record labels and artists. And this doesn't even include the enormous revenues they receive from concerts, merchandising, endorsements and other and licensing.