Radio's Performance Exemption Solution

Shane Media's Lee Logan is a smart fellow. After I wrote about the ingrates at the record labels who are trying to get radio's performance royalty exemption revoked, he contacted me with a genius idea.

Pay it.

That's right, pay the labels their extra tax -- the rights fee.

Oh, but it gets much better that. Here's Lee's premise:

Let’s use (MusicFirst) Coalition Executive Director Doyle Bartlett’s own math when he stated, “A loophole in the law lets AM and FM radio stations earn $16 billion a year in advertising revenue.” The number is grossly misleading because all radio is not music radio. But for the sake of argument - the average music station dedicates 20% of its time to commercial matter to generate said $16 billion. That means $64 billion a year, or the other 80% of the time, is dedicated to promoting music. $64 billion worth of radio airtime selling the products of the artists, musicians and music business."

Logan is saying what if all radio stations were allowed to charge their rate per minute for all of the songs played.

Radio pays the rights fees.

Record labels, artists and distributors pay through the nose on a per minute basis -- the way the rest of radio's advertisers do.

Give them a discount while you're at it -- we won't even charge the top of the rate card.

A fund is formed, the federal government (an institution used to collecting money and misspending it) will act as a trust to distribute it. That way the labels get their fair share and the poor starving artists can get as rich as the label execs. They've got to love this kind of communism.

Here's Logan's example of how it would work for in the radio industry:

As an example, think of the new Coldplay song, “Viva La Vida.” iTunes gave them free TV time and netted the band and EMI a mountain of downloads along with a pile of cash for Apple. Radio helped EMI and Coldplay sell 730,000 of those old fashioned CDs at $20 a piece. If my math is right that’s $14,600,000.00 in sales in the first week. Not a bad payday. But let’s apply the airtime formula for one station, say B101. Estimated ROS rate $400 a minute (and that could be low). For a 3-minute song that would be $1,200 every time the song plays. Say it plays 8 times a day equaling $9,600 a day. What a great idea! B101 could bill EMI and Coldplay a minimum of $77,000 a week during the song’s current rotation. In the life of just the current rotation B101 could bill EMI and Coldplay approximately $2,500,000.00! Then add recurrent and gold categories and Jerry Lee could own the Capitol tower and all of the Coldplay Ferraris from just one hit song! Then let’s add Lite in New York and Mix in Boston, Mix in Chicago, Star in LA and San Francisco – wow! Artists and labels would be the indentured servants of radio under the plan of simple reciprocity. To put it in Doyle Bartlett’s terms, “Fundamental Fairness!”

So, maybe it's best to let the labels and their cohorts get their way. Seek legislation to enable radio to charge for the content that the labels want to in essence tax.

And where is the NAB on all of this?

The labels march Nancy Sinatra and other artists through the halls of Congress and we bring in David Rehr -- and I say that with all due respect. You get what I mean.

While lawmakers love to rub elbows with the stars, they answer to their constituents back home.

Organize them.

March them through Washington.

Have a national day of silence -- no radio. Pull the plug in protest.

Your duly elected representatives will cave faster than they do when they are appropriating their next pay raise.

Or, try giving the labels what they want.

So, to quote President Bush -- "Bring it on".

But remember, "Mission Accomplished" could cost the labels a lot more than they figured when they use their fuzzy math.

If the labels insist on seeking the repeal of radio's performance tax exemption, perhaps the solution is -- pay for play.

The labels know all about this concept and they'll wish for the old days when radio got cheap entertainment and the labels got free advertising so they could take all the profits.

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