The Labels' No Tax Left Behind Act

Did you see a lot of CDs under the tree this year?

Guess not.

CD sales are off and when the final figures are in that include the fourth quarter of 2007, it's not going to be pretty.

If you follow the logic record labels are applying in seeking to lift the royalty tax exemption from radio, now is a good time to fight for a separate tax on the record industry for failing to support the radio stations that have generated most of their sales profits in modern times. In other words hit them when they are down -- as they are trying to do to the radio industry.

It could be radio's answer to the record labels' No Tax Left Behind Act

While we let pros -- I mean lawyers -- fight it out, let's see what else the record labels are trying to do to kill off what's left of their business:

1. They've recently enlisted the support of the American Federation of Television and Radio Artists (AFL-CIO) to support the wrongheaded Public Performance Rights Act. You may remember that Congressmen Howard Berman and Darrell Issa (both from California) are pandering to their real constituents -- the music business -- by seeking additional taxes on radio airplay. Here's AFTRA's one-sided pitch -- the one that leaves out how much money radio airplay has made for record labels:
"It is hard to believe that for decades now, a commercial business has built itself into a multi-billion dollar industry by using AFTRA members' works without paying for them. But that is exactly what has been happening. Radio broadcasters in this country have attracted their audience -- and, in turn, paying advertisers -- through the lure of our music without paying one cent to the artists and musicians who created it. While songwriters are justly compensated when their compositions are played over the air, the law denies the same right to those who bring the songs to life. It is time to finally do away with this inequity".
Not one mention of what a crummy business the record labels would have had if they had to find other ways to promote their music. Hell, the major labels can't even use the free Internet to sell products or services. What will they do without terrestrial radio?

There's 127 lawmakers on record against the legislation and even the NAB knows which side of this issue to be on yet I think we could see a performance tax levied on radio in the near future and that would be disastrous -- for the music industry, too.

And by the way, a performance tax on the par with what the CRB levied on satellite and Internet is unacceptable. Satellite and Internet should be on a par with terrestrial radio -- we play, you ring the cash register and get to keep the proceeds.

2. The slumping record industry has spent the year expanding their RIAA-driven jihad to punish a handful of young people for what has now become commonplace and accepted among most 18-24 year olds -- stealing music. Sorry you don't like it but the reality is as long as there is an Internet the labels can no longer insure that their product is safe from piracy. Right or wrong -- suing a handful of people hasn't worked, isn't working and will never work. The labels apparently have no other strategy.

3. Labels have introduced the before Christmas layoffs and firings that their radio industry brethren have become so skilled at doing. Of course this may cut expenses but as with radio, it doesn't do one thing for getting business back on track. Impressive with Wall Street but a flop at the malls where what record stores still operate are left to sell CDs to those who will buy them. Now that's what I call music!

4. Still no mobile strategy.

5. Still no new hit music genre to drive sales, thefts -- anything.

A friend of mine emailed me over the holiday to say he had dinner with lots of young people at his extended family gathering and he was reporting that there was more interest in radio (as a source for discovering new music) than one might expect. But get young people on the topic of record labels and they hate them.

Maybe that's a new strategy -- get them to hate us and we'll make good customers out of them. If so, someone tell Target they need to get on board with this brilliant record label strategy.

I read recently in Inside Radio that an unnamed Texas air personality's idea for dealing with the labels' attempt to abolish radio's royalty exemption is "Let's stop announcing artists and song titles". Well, hell, we did that a long time ago.

Radio industry leaders don't have the spine or the wisdom to do so, but the answer to any performance tax -- should it pass -- is to announce that radio stations will play only music that is rights free. Period. Done. No exceptions. Stand tall. We shall overcome. Solidarity.

I know. I know. You say this would kill radio.

No, what's killing radio is playing the same old songs over and over again. The audience is rebelling -- young people have turned to the wide expanse of the Internet for more variety. Now you're going to get the honor of paying for the needless repetition of what the labels call new music. This is your chance to get out from under a losing strategy.

So, get some guts.

Publicly vow that even if one-half of one percent of a tax is passed, your stations will open its airwaves to all those talented artists out there who represent diversity and are willing to forgo their royalties in order to get airplay.

You'll be helping the young artists of tomorrow.

You'll be giving your listeners the variety that is not currently available on terrestrial radio.

And you'll bring the record labels to their knees in 30 days or less. The labels know they can't exist without radio airplay. They just know the radio industry will accept the royalty tax they're pushing through.

Put teeth into your opposition to a radio royalty tax and you'll be taking a giant first step in helping the labels develop a new business -- waste management -- destroying all the remaining CDs that will not sell without radio airplay.

I dare you.

Step up or shut up when they eventually make you pay for ringing their cash registers.

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