The billionaire is more an entrepreneur than a politician although some would make a good argument that he has both those qualities.
Bloomberg faces the same mess everyone else does these days -- budget shortfalls -- and to close the $4 billion gap in his municipal budget he's proposing tax increases and new taxes.
He's desperate.
So, he's doing what desperate people do. They propose the taxes to nowhere.
How's this one?
A tax on downloading a song or a movie for your iPod or Mp3 player.
Or a new tax on satellite radio. Satellite radio, for God sakes! Can you imagine a business that is more dead on arrival these days than satellite radio?
Why not, you ask?
Because comparatively so few people actually download music legally or listen to satellite radio. What are you gaining? More importantly, what future growth are you helping to suppress?
This is my complaint with politicians and business CEOs: When it doubt, squeeze it out.
There is no way the music download tax will make a significant contribution to New York's budget shortfall.
All it will do is encourage more people to download music for free. It's a recession, isn't it? Not just for governments but consumers.
Not that they need Mayor Bloomberg's latest incentive.
The denial music, radio and television is in right now can be stated simply.
We're in a recession. It will be tough for a while. When things get better, everything will come back.
Not so fast.
Radio isn't coming back. The Mr. Big Stuffs of consolidation lost sight of the next generation and some still don't care that young people dislike radio and choose just about every other entertainment option than listening to a terrestrial radio signal.
Oh, and there's about 80 million in the generation radio CEOs took for granted.
The record business is not coming back.
Don't believe me? Look to declining CD sales. And why would CD sales drop every year? Because a new generation that the Label Almighty ignored have redefined the music industry. Clueless label execs think their fate went south when Napster came along and music was easily shared on the Internet.
They would be wrong.
What really killed the record business is consolidation of the record labels where the future was seen as cutting expenses and increasing profits rather than growing artists, genres and distribution routes.
They still don't get it.
That's why they offer the usual answers -- repealing the performance tax on radio stations to help them with their budget shortfalls and other useless routes to replenishing revenue without having to innovate.
Radio doesn't even make the hits anymore.
But the labels go taxing the industry that helped them make their money for decades. In recent days I have spoken against granting protection from repeal of the performance exemption for big consolidators because that's not why it was enacted. Just the smaller operators who might -- I repeat might -- choose music diversity on a local level should continue to get the performance fee exemption.
When in need, tax -- that's the mantra of the desperate.
For all the talk about economic stimulus, there are Democrats and Republicans who are wondering how more billions of incentive legislation loaded with pork will stimulate the U.S. economy.
I like my pork in bacon, I don't know about you.
Here's the point.
If the president wants to have a direct impact on stimulating the economy, he needs to spend federal money directly on creating jobs -- not indirectly, like endowing the arts through public broadcasting (as much as I like public broadcasting).
And if the mayor of New York wants to not have budget shortfalls, he needs to stimulate economic growth by unburdening the entrepreneurial businesses he is now proposing to hinder with more taxes.
I mean, Mayor Bloomberg is also trying to add taxes on movies, sporting events, cable TV, concerts, bowling alleys plus more levies on taxis to take you to entertainment events, limos and even pedicabs. Those pedicab drivers are really the ones you need to whip into shape to manage the budget. Hell, they can barely make a living as it is. It's insane.
In almost every case -- when times are tough -- political and business leaders turn to mechanisms that inhibit existing streams of revenues. They hurt potential and do not stimulate growth.
In our music and media area, we have alternatives to repealing performance taxes and implementing new taxes on growing revenue streams.
• The performance tax on radio should be preserved for small groups of radio stations that can certify that their music diversity comes from local decisions. For everyone else including the major consolidators -- no free ride.
• The onerous tax on the Internet streams should be repealed. There should be a "grace" period of five years with no royalty taxes to stimulate -- there's that word again -- growth of Internet broadcasting and mobile content. After that, a reasonable and equitable levy on companies that are making a profit using music as part of their online businesses. In addition, fair rates should be guaranteed at that point for seven years at a time to allow for even more start-up companies to budget their business plans for the future.
• Record labels should seek to renegotiate publishing rates to allow them to lower the price of music to five or ten cents a download. Record execs often write to me to argue that even if they wanted to make downloads available for the price of a text message -- and later sell unlimited downloading packages to consumers -- the publishing companies wouldn't allow it. Well, get to work. Publishing interests are going nowhere fast if the music industry dies at the hands of free downloading -- as it will.
• Congress should give tax relief to local mom and pop radio groups that service their communities from Main Street not that other evil place. In other words, encourage broadcasters to operate as local entities in the public interest, convenience and necessity by making it very attractive to run a profitable local business service. More local jobs. More local revenue when advertisers do well so they can pay their rents and taxes.
• On the alternative, feel free to tax every station that runs more than ten or fifteen percent of their prime programming from national sources. You can assume they are saving money by not employing local people so tax the corporations on their windfall savings before they wind up on the profit line.
The music/media business has always had it backwards.
You don't sue people to stop a downloading revolution that could make you richer by selling volume. Five or ten cent downloads rather than overpriced CDs in Wal-Mart.
You don't reward mega corporations for firing good, loyal and talented people by nationalizing their local radio licenses. You give them incentives to keep them working.
You don't snuff out the burgeoning Internet streaming business with draconian royalty rates before they've even made a business out of their entrepreneurship. You give them tax breaks and then fair levies based on profitability. You provide certainty by locking in seven-year windows of growth to allow these new businesses to prosper.
What follows is an economic boom.
Of course, they won't listen.
The Bloomberg proposal will neither significantly reduce New York's budget shortfall nor stimulate enough growth to contribute to its economic recovery.
The music/media business would be wise to go to school on not only how our general economy got into trouble in the first place but why it is not likely to get out without stimulating promising businesses to grow.
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