WASHINGTON – Radio station KBCY in Abilene,Texas,recently hosted a three-day broadcast from the Mall of Abilene to raise money for the Children's Miracle Hospital. But the station's managers say activities like these may become impossible if Congress passes a bill to impose a new fee on radio stations.
The bill,called the Performance Rights Act,would impose royalty payments on radio stations to be paid to performers. Stations already pay royalties to songwriters.
Royalty payments wouldn't kick in for three years for most stations,giving them time to adjust. Radio stations with revenues of $1.25 million a year or less – 75 percent of stations – would pay between $100 and $5,000. Larger stations could pay much more,based on revenues.
KBCY and other local radio stations have a history of community service. But rising costs are making these activities too expensive.
“Each year it gets more difficult to do because of staffing requirements,” said Jim Christoferson,KBCY market manager. With lower advertising revenues and a struggling economy,the station can't afford a big staff.
“We'll have to rely on fewer people to do more jobs and rely on syndicated programs,” Christoferson said. “It's going to affect the bottom line in a dramatic way.”
Radio stations have been running advertisements urging their listeners to contact members of Congress to combat the bill.
Some members of Congress are trying to pass the Local Radio Freedom Act to combat the Performance Rights Act.
Rep. Mike Conaway,R-Texas,who sponsored the bill in the House,said the Performance Rights Act would “put a financial strain on an awful lot of the small radio stations,which are barely making it as it is.”
Marty Machowsky,spokesman for the Music First Coalition,the legislative arm of the music industry,said the bill accounts for struggling small radio stations since smaller stations pay lower fees. “We think that's affordable,” Machowsky said.
The performance tax may not be easy on radio,but the music industry believes justice is on its side.
“There's a fundamental issue of fairness here,” said Machowsky.
Machowsky said the bill would “close a loophole” that allows radio stations to earn billions a year “without compensating the artists who bring the music to life.”
According to a press release from Sen. Patrick Leahy,D-Vt.,who sponsored the Performance Rights Act,both songwriters and performers are paid for songs played on Internet or satellite radio. “But when over-the-air stations play music,the performer is not compensated,” Leahy said.
Machowsky's group brought singer Dionne Warwick and others to Capitol Hill last week for a press conference to support the bill.
Kristopher Jones,director of media relations for the National Association of Broadcasters,said the music industry doesn't appreciate the benefit radio provides for artists.
“If you want a hit song,if you want to sell albums,if you want to sell concert tickets,you've got to get your song on the radio,” he said.
Leahy said he recognizes that radio and the music industry have a symbiotic relationship.
“Radio play surely has promotional value to the artists,no one is denying that,” Leahy said. “But there is a property right in the sound recording,and those that create the content should be fairly compensated for their work.”
Brian Gantman,government relations director for Educational Media Foundation in Rockland,Calif.,whose client Air 1 owns Abilene's KAGT,said the law will be “absolutely disastrous for radio,” and will harm the recording industry as well.
“It's going to hurt small and upcoming artists because radios are going to take fewer chances on these people,” he said. “They're going to go with the more established artists.”
Machowsky said the idea that radio stations would stop playing new artists is a myth because radio stations rarely play new artists anyway.
“Let's set the record straight,” he said. “Radio stations are not risk takers with music. They have not been for a long time.”
He said most other countries have a performance tax of some sort,with a few exceptions,including Iran and China.
“That's not the kind of company we should be keeping on this issue,” he said.
Conaway said his district includes a lot of “small,struggling radio stations” that appreciate his decision to push forth a bill to fight the Performance Rights Act.
“When I do come across radio stations,they thank me for it,” he said.
Conaway said he doubts the Local Radio Freedom Act will become law.
“I do not anticipate that the speaker will let it come to the floor,” he said. “On the same token,I don't think this bill will let the other bill come through either. It's a standoff.”