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National Association of Broadcasters
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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 272 million Americans who rely on local radio.

Broadcasters urge legislators to join more than 200 colleagues in the House and Senate by supporting the Local Radio Freedom Act (H.Con.Res. 20, S.Con.Res. 5), which opposes a performance tax.

Here's why:

For nearly a century, record labels and performers have thrived from 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 these local radio stations that are, ironically, their greatest promotional tool.

Each Congress, legislation backed by the record labels is introduced that would impose a new fee on local radio stations simply for airing music on the radio. This legislation would 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. 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. Nevertheless, new performance tax legislation, the AM-FM Act, has been introduced this Congress in the House and Senate.

The Local Radio Freedom Act, which opposes any new tax, fee or royalty on local radio stations, enjoys strong bipartisan support in both chambers. This strong support for local radio was made clear in the 2018 enactment of the Music Modernization Act, consensus legislation that benefitted all stakeholders - and did not contain a performance tax.

Broadcasters have consistently demonstrated good faith in working with the record labels to try to resolve the performance tax issue through private discussions. In the past few years, numerous radio companies and record labels have negotiated private deals that compensate copyright owners and performers, demonstrating the ability of the marketplace to best address the issue.

The bottom line:

Please stand up for your local radio listeners by supporting the Local Radio Freedom Act (H.Con.Res. 20, S.Con.Res. 5), which opposes a performance tax. Congress should not enact a government-imposed performance tax on local radio; however, broadcasters stand ready to work with Congress and the music industry on a balanced music licensing proposal that promotes innovation and recognizes the benefit to artists and listeners of radio's free, locally-focused platform.





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