Free Radio Alliance Forms To Combat Music Industry-Backed Performance Tax

http://harpmagazine.com/news/detail.cfm?article=11550

Fred Mills
August 12, 2007

Two weeks ago we brought you word of the Music First Coalition (MFC) a group comprising recording industry organizations such as the RIAA and SoundExchange plus assorted artists and bands, and its efforts—some of them rather questionable—to seek airplay royalties from terrestrial radio. (See our July 29 report, ”Weapons of NAB Destruction”.) And MFC-related controversy continues to grow; for example, an August 6 Wired News report outlines how SoundExchange quietly established and helps fund MFC and how it has also been engaged in some potential violations of statutes relating to nonprofits and lobbying.

With revenues steadily eroding, the music industry is panicking and desperately fishing around for any possible alternate revenue streams—including radio, which traditionally had been considered a hugely effective, and free, promotional tool for record labels. The panic is understandable, particularly at the artists’ level. But some of the current activity purportedly on the behalf of the artists is wrongheaded, not to mention some of the worst possible public relations moves that could be made.

Elsewhere, however, some sensible, level-headed attempts to strike back are underway. This week a coalition of local radio broadcasters, Latino and African American groups, non-profit associations and other community groups announced their intention to form the Free Radio Alliance to oppose a “performance tax” being pushed in Congress by the recording industry lobby. Although still in the beginning stages, the Free Radio Alliance already boasts 30 plus members and continues to grow.

“More than half of the proposed performance tax would go to line the pockets of the record-label conglomerates, three out of four which are headquartered in other countries,” said Free Radio spokesperson Cathy Rought, in an official statement. “The record labels are desperately looking for financial help to support their failing business model, and they are doing so at the expense of local communities across the country. The Free Radio Alliance is organizing a grassroots campaign to stop this tax in its tracks.

“The victims of this tax would include smaller, specialized radio stations that serve as the cultural lifeline to numerous religious, Hispanic, African American and other niche communities. Many of these stations have a very modest operating budget, yet would be expected to equally shoulder their portion of the reported $2 to $7 billion tax. The performance tax would harm the diversity in American radio, against the rightful priorities that Congress and the FCC have set to reinforce diversity over our airwaves.”

Rought also pointed out how the performance tax would hurt community and public radio stations, non-profit entities that don’t have the deep pockets of, say, Clear Channel affiliates. With the proposed tax, such stations would have to divert much of their operating monies (generally raised through underwriting and the on-air fund drives) to pay the performance taxes. One projected scenario: instead of running public service announcements to benefit their local communities, the stations would be forced to use more airtime for advertisements to counter the $2 to $7 billion lost as a result of the performance tax. ”Many non-profit organizations could lose their number one vehicle for getting their stories told,” said Rought. “Bailing out the international recording industry conglomerates should not trump the needs within our local communities.”

The recording industry’s argument is that other countries impose performance taxes, but that’s essentially a smoke and mirrors ploy. As Rought noted, “Comparing American radio to radio in other countries is a truly apples-to-oranges comparison. Radio, in many other countries, is either owned and operated or subsidized by the government, including the BBC. This means that these countries also subsidize or help to fund their media. The US has a very different model.”

But wait, as the saying goes, there’s more.

Recently the U.S. Register of Copyrights Marybeth Peters told Congress that a performance tax should ultimately be applied to ALL commercial businesses that play recorded music in public—from the restaurant down the street to the Hot Topic store in the mall to your favorite local watering hole to independent jukebox operators. Yet they already pay out royalties to artists and composers; if the record labels embrace the performance tax models of other countries, these businesses will also be subjected to the tax. And, as with the Internet Radio royalties battle, if that scenario comes to pass, a lot of small businesses won’t be able to absorb the cost and unless they opt to simply not play any music—pretty unlikely in the case of bars—will be forced out of business.

Rought: “The record labels have ruthlessly pursued consumers of all ages for compensation, and I can’t imagine mom-and-pop small businesses will be below their radar. Even if not right away, a performance tax precedent at any level will eventually drag the fight to everybody’s doorstep.

“One minute, digital downloading is the ‘threat,’ the next minute it’s radio. The record labels’ definition of ‘threat’ changes with the wind. People who believe this fight is only limited to radio and won’t come to their doorstep are simply fooling themselves.”

For more information, contact the Free Radio Alliance at 1-800-954-0200 or via email at info@freeradioalliance.com. Or visit them on the web at the Free Radio Alliance website.

Tom Petty… The last DJ

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: