Indie Label Against Performance Royalties

Guest Editorial from Savannah Music Group

Jeff Cohen, Co-Founder and CEO, Dave Gibson, Co-Founder and CCO, Laurie Spoon, VP/GM; http://www.savannahmusicgroup.com

Last week, apparently fearful that congress would pass a mandate this winter, the National Association of Broadcasters produced a set of what it called “proposed terms of consideration,” allowing for performance royalties, monies paid to artists and musicians by the radio industry for airing their work. While this system exists in Europe, historically, in this country, music has aired without payment in consideration for its promotional value.

Politicians might be well advised to not interfere with the music business.

Savannah Music Group is an independent publishing and record company. We fully support existing writers’ and publishers’ royalties. We think that performance royalties are a bad idea for the beleaguered radio industry, which is where most people first hear music that they later purchase or performing groups whose concerts they later attend.

Our songwriters and artists depend on radio airplay for their success. Radio industry spokespeople have testified in numerous public forums that a performance royalty will result in fewer stations playing music, and airplay being further concentrated on already established artists. While this may benefit the major multi-national record companies, it will make it more difficult for new music and new artists to get the radio exposure they need to be successful and therefore put small companies like Savannah and our artists at a competitive disadvantage. Some musicians are supporting this measure in hopes of receiving royalties for airplay, not realizing that their opportunities to be hired for future sessions will dry up as the airplay diminishes.

Some songwriters support this measure in solidarity with their colleagues in the music business, having been mollified by a provision in the legislation which protects their existing royalties from radio. However, these songwriters will lose net income from broadcast radio when the number of stations playing music decreases.

We are grateful for the support that radio has given Savannah’s music and artists. Should a performance royalty be mandated by Congress, artists and labels must have the opportunity to opt out and let their records be played free of charge by radio, with an appropriate reduction in the proposed tiered rate proportional to the amount of license free music played. Record companies and artists that don’t agree with charging radio for airplay should not be forced by the government to do so.

Here is the NAB Aug. 6 statement on which the above editorial is based.

WASHINGTON, DC -The NAB Radio Board met today in Washington for an educational update on the status of ongoing discussions between broadcast industry representatives and representatives of musicFirst. In order to ensure accuracy in reports of the ongoing discussions, NAB is providing a one-page fact sheet below. In addition, the following statement can be attributed to NAB spokesman Dennis Wharton:

“The NAB Radio Board had a full and productive exchange of ideas today on the status of discussions with musicFirst representatives. The talks are part of an ongoing dialogue with the Board and NAB membership on possible alternatives to pending legislation that would be devastating to the future of free and local radio. No votes were taken at today’s Board meeting. The Board reiterated its strong opposition to the pending bill in Congress, while agreeing that it is appropriate for NAB representatives to continue discussions with musicFirst. Interested parties will be updated quickly if and when new developments emerge.”

PROPOSED Terms Under Consideration in Performance Tax Discussion
In 2009, Rep. John Conyers (MI-14) and Sen. Patrick Leahy (VT) introduced the Performance Rights Act (PRA) in the House and Senate, respectively. The legislation was voted out of the respective Judiciary Committees and has the support of certain members of congressional leadership.
Broadcasters’ counter resolution – the Local Radio Freedom Act – garnered significant support, which has helped prevent further movement on PRA.
At the direction of House and Senate leaders in late 2009, NAB met with MusicFirst – representing artists, labels and unions. To date discussions have yielded the following potential terms. These terms have NOT BEEN AGREED TO, but are under discussion by the industry.
They include:

–Tiered rate of 1% or less for all net revenue (roughly $100 million for the industry) which is permanent and can not be adjusted without changing statute or by mutual agreement
–PERMANENT removal of CRB jurisdiction for terrestrial and streaming
–Streaming rate reduction from current rates
–Inclusion of radio chips on all mobile phones
–AFTRA issues resolved (agency commercial replacement on webcasts)

The tiered rate of 1% or less for all net revenue would be as follows:
–Commercial and non-profit stations with revenue less than $50,000 annually would pay the lesser of $100 or 1% of revenue annually
–Commercial and non-profit stations with revenue between $50,000 to $100,000 annually would pay $500 annually
–Non-profit stations with revenue more than $100,000 annually would pay $1,000 annually
–Commercial stations with revenue between $100,000 to $500,000 annually would pay the lesser of $2,500 or 1% of revenue annually
–Commercial stations with revenue between $500,000 to $1,250,000 annually would pay $5,000 annually
–Commercial stations with revenue more than $1,250,000 annually would pay 1% of revenue annually

It is important to note that stations with incidental music use – news, talk and sports radio – would not pay for music. Additionally, religious services – not religious music – would be exempt from music fees.

The above referenced rates would be permanently fixed by statute and can only be changed by act of Congress or joint agreement between both parties.

About NAB
The National Association of Broadcasters is the premier advocacy association for America’s broadcasters. NAB advances radio and television interests in legislative, regulatory and public affairs. Through advocacy, education and innovation, NAB enables broadcasters to best serve their communities, strengthen their businesses and seize new opportunities in the digital age. Learn more at www.nab.org.

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About the Author

David M. Ross has been covering Nashville's music industry for over 25 years. [email protected]

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