Unable to explain why satellite radio, Internet streaming-services, and everybody else has to pay royalties to artists and it doesn’t, terrestrial radio fights back with words like “tax” and “foreign-owned labels.”
Last week I mentioned how the music industry had begun calling terrestrial radio “a form of piracy.” They did so as part of an effort to get full royalty payments that now otherwise exclude royalties having to be paid to artists and musicians. Now it seems the National Assn. of Broadcasters (NAB) is fighting back with a clever series of charged catchphrases and terms.
For soon after a House subcommittee passed a bill to require full royalty payments from radio broadcasters they immediately went on the offensive by calling it a “tax” that “migrates overseas” to “subsidize the outdated business model of giant international conglomerates.” As xenophobic and misleading as it is you have to admit that whomever came up with this campaign deserves a raise.
The NAB calls it a “tax” since it’s a new form of revenue required to play copyrighted music, and plays the race card by trying to scare people about “our” money going to foreign conglomerates (3 of music’s Big 4 are based overseas.. Instead of being worried about Dubai Inc. buying up the Chrysler Building, shares of NASDAQ or Citibank, we should apparently be worried that our radio stations have to pay THE ARTISTS (foreign and domestic) vis a vis “foreign-owned” entities.
They also said that free airplay drives music sales to which Rep. Howard Berman (D-CA), a co-author of the bill and chairman of the House Subcommittee on Courts, the Internet and Intellectual Property, said that only “a correlation, not causation” exists between record spins on the radio and sales.
“The approach we’ve taken to establish performance rights for musicians will provide broadcasters the opportunity to account for any promotional value they provide in the course of determining their royalty rate,” Berman said.
“Today’s vote comes as a complete non-surprise, given the House IP Subcommittee’s history of support for the RIAA-backed tax on local radio stations,” said NAB Executive VP Dennis Wharton. “Despite today’s action, there remains broad bipartisan resistance to the RIAA tax from members of Congress who question whether a punitive fee on American’s hometown radio stations should be used to bail out the failing business model of foreign-owned record labels.” said Dennis Wharton.
How many radio station owners are based in your hometown? The transmitter itself may be, but the owner of 1184 stations in this country lives in San Antonio Texas, Clear Channel Corporate HQ.
Terrestrial radio is even fighting back with legislation of its own. Called the “Local Radio Freedom Act” (everybody likes locals and of course freedom right?) is would mandate 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,”
Now it’s no secret that some labels, like Universal Music for example, have been charged with cheating musicians out of millions, and that SoundExchange, the “non-profit” set up to collect royalties “on behalf of artists,” has had an oddly tough time finding artists so they can be properly paid (a quick Google search could find most), but I think it’s unfair to emerging radio platforms with satellite and online radio to have to pay more than their terrestrial counterpart does.
Moreover, I do still have to hand it to the RIAA for continuing to stun both its proponents and opponents for going after its longtime companion, terrestrial radio, which for decades it actually paid to air music. For if anything it points out that artists and musicians essentially received no royalties from decades of radio airplay while the RIAA and everybody else apparently did. Why the change of heart now? Is it too much of a stretch to think that it’s because the music industry would get some of that money?
Probably not.
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“They also said that free airplay drives music sales to which Rep. Howard Berman (D-CA) a co-author of the bill and chairman of the House Subcommittee on Courts the Internet and Intellectual Property said that only “a correlation not causation” exists between record spins on the radio and sales.”
Hmm Correlation not Causation… sounds like a sound argument for P2P as well wouldn’t you say?
@Mord
Good point….. ;P
NAB stations can always pull the same stunt twice and play nothing but independent content. It worked so well the last time.
I disagree..
Not with everything but with the whole premise of radio stations having to pay royalties in the first place. I speak from an Australian context so I’m not sure if the situation is exactly the same in the states but it can’t be too far off radio generates a shit load of the buzz and hype for music I’ve found so many new artists just by hearing a song or two of theirs on Triple J (very popular alternative station here). If you force radio to pay more royalties unfortunately nothing will actually change stations will foot the bill and continue to put out the same sort of mix. Wouldn’t it then make sense for a record company to reduce those royalties voluntarily therefore encouraging more airtime for their music simply because it’s cheaper for the station?
Your article comes across as very pro-RIAA (except towards the end)
As for satellite radio the same rules should apply in all situations obviously but they too should not have to pay royalties imo. Streaming sites on the other hand I think should depend on the type of streaming.. for traditional type structured broadcasts they should be treated as radio stations for sites which allow streaming of a particular song that the user selects maybe something a bit different..
Would be interested in your reply I like all of your other articles just btw =P
While I can appreciate this site’s vigilance in uncovering the recording industry’s unfair treatment of artists with regard to royalty payment, I respectfully ask the author of this article to do a little more research about the terrestrial radio industry. I am a member of the third generation of a family owned radio company. For over 50 years my family has worked hard and sacrificed to bring quality FREE programming to the communities we service. Satellite radio is a paid subcription service. Again, terrestrial radio is FREE to all. There are 13,000 radio stations in the United States – less than 2000 of them are owned by Wall Street driven companies like Clear Channel. The rest of us have invested in bringing the cities we live and do business in entertainment options relevant to the listening public’s needs and desires. While there simply isn’t enough bandwidth or capital to be all things to all people – we do a pretty good job of servicing the majority. And it ain’t cheap folks! The bulk of our expense is in labor – radio employs thousands of people nationwide, next you can add to that expense technical equipment costs, software costs, BMI and Ascap royalties paid, public utility bills, astronical ratings service fees from Arbitron, music and audience research fees, on air promotion costs, station marketing costs, programming costs (including play by play sports rights fees, syndicated show fees, weather service fees, station imaging voiceover fees, jingle fees and news service fees), internet website maintenance and staffing, engineering costs, commisions paid to advertising agencies and national rep firms – not to mention the challenges that all company’s face – rising health care costs and uncollectible receivables – all of which leave very little profit at the end of the day. Our company has consistently reinvested the majority of our profit in upgrading our facilities and strengthening our stations. Paying “artists” royalty fees which we all know means “paying record companies royalty fees of which very little will actually be passed along to the artists” – would bankrupt terrestrial radio. I’m not kidding – bankrupt. The RIAA sees companies like Clear Channel and assumes that the industry has deep enough pockets to bail record labels out of their current financial conundrum. I’m sorry to report that we don’t. The NAB is working on behalf of the 11,000 radio stations in the United States that aren’t corporately owned. The ones that do give a damn about what their listeners want, about their advertising clients results and their local economy’s success as well as supporting the community at large through the charitable donation of airtime. Our company gave away hundreds of thousands of dollars in inventory to support non-profit events and causes last year. And unlike the newspapers or the internet our inventory is not unlimited. You can’t create more minutes in a day.
So here is what will happen – if the RIAA succeeds in taxing performance right fees on radio stations – thousands of jobs will be lost, hundreds of licenses will be turned in and “FREE” terrestrial radio will be gone. We will have to completely change our business model for any hope of survival. We cannot pass the cost along to advertisers – they are already suffering in this economy and we have had to lower our pricing in response to this (even though our own expenses continue to climb). So we will either have to look to non -RIAA artists for programming, create more talk programming or charge for programming.
Why is this important to you – BECAUSE RIGHT NOW – THE AIRWAVES STILL BELONG TO YOU – THEY ARE FREE. We don’t play what we “like” to play – the market dictates to us what music it wants us to play in the form of listenership.
If you want to help musicians why would you advocate biting the hand that has fed them for decades. One half of one percent of the musicians who submit demos to record companies will ever be signed. That means that thousands of talented individuals and bands would kill for the opportunity to get the free radio play that today’s artists receive and enjoy. It is a symbiotic relationship at its finest. Should radio be faulted because artists sign “their life away” with poor record deals that fail to compensate them for success? We’ve already made our contribution to their success why should we and the listening public have to pay twice?
You also fail to address the fact that we all know that nobody gets rich off of record sales – due to a myriad of reasons already named . They do get rich, however, from touring, lucrative product endorsements, creating their own music downloading sites that charge a fraction of what the labels do and the merchandising of their name, face and image. All of which radio offers “free” exposure and promotion to them in the form of airplay. Why don’t my radio stations get a cut of the royalties from all of Britney’s perfumes? Or how about Gwen Stefani’s designer clothing line? Give me a break. You are going after the wrong entity. It all goes back to the legacy of greed perpertuated by the record labels themselves.
As a footnote – expect to see Clear Channel, Cumulus, Citadel, and others on Capital Hill next with their hands out for bailout money. The falsely inflated and unrealistic pricing they paid for their property acquisitions (to elevate their stock profiles) have left all of them with insurmountable debt service. Debt they do not have the capital to cover – mass sell offs, breakups and reorganization will occur with these corporate radio entities in the next year. So any illusion that uninformed people have of the radio industry earning the kind of profits to afford to pay the RIAA these royalties is completely misguided. We only receive 8% of the total advertising pie despite the fact that we service most of the nation’s population. (Over 92% of the public listen to terrestrial radio each week – so much for Satellite and Ipods).
People want local news, local weather and the companionship they feel they receive from our on air personalities if it was just music radio would have succombed to other technologies long ago.