From Inside Radio:
NAB’s next defensive fight — against a “performance tax.” Language has mystical power in Washington and NAB boss David Rehr decides to call the music industry’s new crusade — for a performance royalty — a “tax.” Radio pays royalties to the owners of a song through performing rights organizations like ASCAP, BMI and SESAC. But decades ago Congress exempted radio from an actual performance royalty. You’re going to be reading a lot about “fairness” and “a level playing field” from the other side — arguing that it’s unfair for Internet and satellite operators to be subject to a royalty that the local FM is not. Rehr’s letter to Congress addresses that point and says the existing system “actually provides the epitome of fairness — free music for free promotion.” This lobbying battle with the RIAA will literally last for years.
I told you this would happen months ago. I’m only surprised that it is happening this quickly.
At the time, I warned that the radio industry has to get out in front of the streaming rate hike issue in support of small webcasters or the “fairness” of those higher rates will be the first step towards the end of radio’s long-time rights advantage.
With the exception of public broadcasting, the support for webcasters from the commercial radio world has been muted, to say the least.
And we shall reap what we sow.
Now the NAB swings into full-bore panic mode, labeling these fees a “performance tax” where “tax” means “any fee we don’t like, regardless of who else has to pay it.”
In this letter from NAB, David Rehr rightly suggests that the music industry pretty much owes its existence to commercial radio. In fact, he suggests it, but doesn’t come out and say it. So I will:
The music industry pretty much owes its existence to commercial radio.
Radio provides a vast and free distribution system that creates and sustains hits, the music most people buy and listen to. If you’re the music industry, what’s it worth to you to have 800 million free distribution points in homes, cars, and workplaces in every corner of America?
The fact that many music fans prefer to steal rather than buy their hits is a music industry problem, but their solution is to derive more dollars from licensing – and that means you and me, friends. The music biz is right about this, of course – they just need some help with their math.
It would be interesting if the NAB actually calculated the dollar value of the free promotion it provides the labels and quantified that promotion in terms of music sales (not airtime). The result would make Congressional jaws drop. And it would be far more compelling an argument than playing silly word games with “fees” and “taxes.”
Now, in fairness, you can argue that without the labels there would be no music radio, and this is also true. But let’s not pretend this is a one-way street. There is a real, tangible value to the airplay provided at no charge to the music industry, and I suggest they factor this into their definition of “fair compensation” before deploying their organ grinders and monkeys with tin cups to stand outside your radio stations and mine.