Tuesday, February 12, 2008

Radio Conglomerate Relief Act Gains Momentum

Radio Ink reports that there are now 148 House members signed on to the Local Radio Freedom Act, aka the Radio Conglomerate Relief Act. The purpose of this Act is to prevent imposition of a performance royalty for sound recordings, which is a recognized right throughout the industrialized world. Congress saw fit to impose a sound recording performance royalty on internet radio, yet apparently are set to refuse the same requirement of terrestrial radio. Are the two methods of delivery so different? They are in one crucial respect: Terrestrial radio enjoys one of the more powerful lobbies this nation has ever seen.

Among some of the preambles to the Act:

  • The U.S. radio and record industries "are the envy of the world, due to the symbioitic relationship that has existed among these industries for decades." Actually, most nations look at our radio industry as archaic and unfair for the very issue under consideration - no performance royalty for recording artists.
  • For 80 years, Congress has rejected calls to impose a "performance fee on local radio stations for simply playing music on the radio and upsetting the mutually beneficial relationship between local radio and the recording industry." Use of language, as I pointed out in an earlier post about this same topic, is critical. Notice that a royalty is described as a fee, two references to "local" radio when in reality we're concerned with major media companies, what is described as a mutually beneficial relationship when really it is radio who benefits by getting to play the music for free, which creates an audience, which in turn allows them to generate profits from advertising.
  • "Local radio stations provide free publicity and promotion to the recording industry and performers of music." True, though this also ignores the fact that the revenues generated by "local" radio stations like Clear Channel enabled it to build the single largest concert promotion company, which in turn used the power of its radio holdings to force artists into unfavorable tour deals.
  • "Congress found that 'the sale of many sound recordings and the careers of many performers benefited considerably from airplay and other promotional activities provided by both noncommercial and advertiser-supported, free over-the-air broadcasting.'" Sure it did, but what does this have to do with whether radio should pay a fee for its use of sound recordings? If recording artists benefit from radio, so have songwriters, and since the dawn of radio Congress saw fit to require radio to pay a royalty to them - why should recording artists be any different?
  • "Local radio broadcasters provide tens of thousands of hours of essential local news and weather information during times of national emergencies and natural disasters, such as September 11, and Hurricanes Katrina and Rita, as well as public affairs programming . . . all of which are jeopardized if local radio stations are forced to divert revenues to pay for a new performance fee." This is my favorite, considering the major proponents of this bill are those who consolidated the industry, and as a result of their consolidation, ensured that most of the Gulf Coast was left in the terrestrial dark after the storm, leaving low-powered stations as the only source of information for tens of thousands of residents (the same low-powered stations that the conglomerates have fought very hard to push off of the dial). These same companies have also been criticized repeatedly for their failure and inability to address local emergencies as a result of the consolidation.
  • "Many thousands of local radio stations will suffer severe economic hardship if any new performance fee is imposed, as will many other small businesses that play music including bars, restaurants, retail establishments." Again with the language, painting a picture of poor mom & pop radio stations having to shut down because of this fee, and of all the other businesses that will be impacted. This is no doubt drawing an analogy to songwriter performance royalties, which are required of all businesses performing music. However, the rules could always be written to only pertain to commercial radio and not an across-the-board performance royalty. There could also be a small, reasonable fee for secondary users like bars and restaurants, and an earnings floor so that small radio isn't unduly burdened. These seem to be far more reasonable solutions than to allow the conglomerates to ride the coattails of the small business struggle.
  • "The hardship that would result from a new performance fee would hurt American businesses, and ultimately the American consumers who rely on local radio for news, weather, and entertainment; and such a performance fee is not justified when the current system has produced the most prolific and innovative broadcasting, music, and sound recording industries in the world." The first part of this is completely bogus, as the conglomerates have already inflicted the damage they complain of through consolidation, i.e., local business have been shuttered and the American public largely has been robbed of the benefits of local radio. The second part is perhaps the most accurate and honest statement in this whole Act: Don't rock the boat.
The meat and potatoes of this Act is the following:

Resolved by the House of Representatives (the Senate concurring, That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings.
It can't be clear enough - a performance royalty on sound recordings is one thing that would benefit the artist just as much (if not more) than the labels or any other non-creative industry participant. Songwriters earn performance royalties and are paid these royalties from third-party performing right organizations. These royalties are almost never subject to recoupment by publishers. Recording artists would similarly be paid performing royalties from a third party, likely SoundExchange (yes, it's an arm of the RIAA but still pays directly to artists), and labels wouldn't be able to recoup advances and recording costs from these royalties, meaning the money goes directly into the pockets of artists.

While I'm no fan of finding new ways to feed the major labels' hunger for profit (even when they are running in the red), it is far more desirable to see them earn more revenue from recorded music as opposed to striking the new "360" deals that are becoming more prevalent. Rather than letting the majors dip even further into the artist's pocket, why not let radio start paying its fair share? In the end, it's always the artist who gets screwed, so why not encourage Congress to do what it hasn't done in our industry . . . ever. Stand up for the little guy. Stop protecting major corporations at the expense of those who are responsible for creating the music from which everyone but the creators seem to profit.

Consider this an informal call to arms - write your lawmakers and tell them to oppose the Radio Conglomerate Relief Act.