Commentary: New Performance Fee Would Hurt Radio

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: Measure could sound sour note for struggling radio : ERIKA SMITH | Indy Star : Posted: February 9, 2009 : Television, with federal lawmakers' 11th-hour delay of the long-planned switch from analog to digital signals, grabbed most of the consumer tech headlines last week. : So I'll bet you didn't notice what other media-related measure Congress picked up. (Don't worry. I'll tell you.) : The Performance Rights Act is back and if it passes, it could affect the way you consume music. : Let me explain: : The Performance Rights Act is bipartisan legislation that would require AM/FM radio broadcasters to pay the artists who perform the songs they play and the copyright holders of those master recordings. : Web and satellite radio companies already pay these performance rights royalties, in addition to royalties for songwriters. : Traditional radio companies only pay songwriters. : AM and FM stations have always been exempt from paying performance rights fees because, or so the story goes, airplay gives artists' unparalleled exposure, which helps them sell CDs. : This argument is starting to hold less water, however, because of radio's declining popularity. : Most Americans still listen to good ol' AM and FM stations (shocking to Sirius XM fans, yes, I know), but we are spending less time doing so. Instead, we are tuning into newer technologies, such as Internet and satellite radio, or iPods. : So why should you care about the Performance Rights Act? : Because levying what will likely be millions of dollars worth of fees on an already struggling industry will make broadcasters' financial plight that much harder. : Indeed, it makes me wonder if the fees would cause some traditional radio broadcasters to go under. : That certainly happened with some Web radio companies after they were forced to pay higher royalties. The federal Copyright Royalty Board increased their royalty rate for performance rights by 300 percent to 1,200 percent. : Since that decision in March 2007, some of the most popular Web radio services, such as Pandora, have added commercials to the mix, gone off the air or pulled out of some markets. : The Performance Rights Act does include some provisions for small traditional radio broadcasters. : Small commercial stations would pay $5,000 per year. Noncommercial stations, such as NPR and those run by colleges, would pay $1,000 per year. Stations that make only incidental uses of music, such as "talk radio" stations, wouldn't pay. And religious services that are broadcast on radio would be exempt. : But big commercial radio broadcasters, such as Indianapolis-based Emmis Communications Corp., would have to deal directly with the Copyright Royalty Board. They would make one annual payment for all the music they play under a rate set through talks or by the board. : The National Association of Broadcasters, which represents the traditional radio industry, naturally isn't happy about the prospect of having to pay for performance rights. : "Local radio broadcasters consider this fee a 'performance tax' that will not only harm your local radio stations but will threaten new artists trying to break into the business as well as your constituents who rely on local radio," David Rehr, president and CEO of the association said. : What's interesting is that webcasters support the Performance Rights Act. Their coalition, SaveNetRadio, says passing it would "level the radio playing field." : This is probably true. But I don't think that leveling every company playing on the field with horrendous fees is the best way to serve listeners.

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