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Performance license fees – Coming to radio?

The following is from Communications Daily, a publication (not available online) that is an influential voice on the communications industry, especially on Capitol Hill.

As you read it consider what I’ve said previously: If the radio industry doesn’t fight the currently proposed streaming rate increase, we are next. If we wait until the wolf is at our doorstep it will be too late.

Broadcasters Fear Web Stream Rates Debate Means Wider Action

A debate over royalties for Web-based radio services and satellite radio could encourage the music industry to try to get more money out of radio broadcasters, industry sources said. The Library of Congress Copyright Royalty Board (CRB) ordered a sharp rise in the performance license webcasters pay, prompting protests by broadcasters and small webcasters (CD March 20 p9). Terrestrial broadcasters don’t pay those royalties. Charging webcasters more could strengthen the case made by groups wanting broadcasters’ exemption erased. “This is the opening bell to something which is going to creep up on us,” radio consultant Mark Ramsey said: “The radio industry will have difficulty arguing that the status quo is equitable when other people with access to the same music pay a higher rate. That’s the kind of argument that usually gets attention.”

Keeping broadcasters exempt from these royalties is among NAB’s top priorities, Exec. Vp Dennis Wharton said: “There would be few higher priorities than preventing a performance tax to be assessed against broadcasters.” Radio stations pay royalties to composers, but not performers or record labels. Broadcasters claim the exposure they provide adequately compensates artists and labels. Last month they got a chance to make that case to legislators when state broadcast groups visited Washington.

SoundExchange, which collects performance license royalties, has been talking big lately. This week Exec. Dir. John Simson told the Washington Post “there’s really no justification for broadcasters not paying [the performance license]… and we’re going to try to address that.” SoundExchange didn’t comment for this story. “It’s always been part of their [industry’s] legislative agenda but they have never really made a hard push to get it done,” broadcast lawyer David Oxenford said: “Now the tempo seems to be ratcheting up somewhat and the rhetoric is getting hotter. I wouldn’t be surprised to see a legislative effort made at some point to try to get broadcasters covered by these royalties.”

Performers deserve to be paid by radio stations who built their businesses playing music, said Future of Music Coalition Exec. Dir. Jenny Toomey. Her group also is fighting the CRB ruling. Still, it’s not right to lump broadcaster obligations with the CRB process, she said: “It’s a flawed structure, but we don’t want to convolute it with the chaos about the webcasting right now.”

Reprinted with the permission of Warren Communications News.

Just for the record, I would recommend that the NAB not refer to this fee as a performance “tax,” since consumers are very unlikely to be sympathetic about a “tax” on a vast industry which provides their content for free.

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