Why the NAB Is Losing Radio’s Royalty Exemption

The radio lobby (National Association of Broadcasters) and the record industry lobby (MusicFIRST Coalition) are being childish.

The record label interests try to make it appear that the radio industry is trying to hurt starving artists by opposing the proposed repeal of the performance royalty exemption.

It’s not like the radio industry doesn’t already pay ASCAP, BMI and SESAC licensing fees.

You’ve got a polarization developing (does this surprise you in today’s political climate?) that you’re either for artists or against them.

The radio lobby is just as bad.

As NAB Spokesperson Dennis Wharton puts it “We’re disappointed the Commerce Department would embrace legislation that would kill jobs in the U.S. and send hundreds of millions of dollars to foreign record labels that have historically exploited artists whose
careers were nurtured by American radio stations.”

Of course, a Commerce Department attorney in a letter to Senator Patrick Leahy (D-VT) says there is “strong support” for eliminating the performance exemption -- like in President Obama.

If you’re a radio owner, you have to be worried when the commerce department says, it’s “a matter of fundamental fairness to performers” that would “provide a level playing field for all broadcasters” -- meaning whether they’re on-air, online or satellite.

You can see what’s slipping away here -- the higher ground.

The NAB insists it still has the edge in Congressional support to defeat the labels' initiative to repeal but it’s close and will get closer sooner than expected.

This isn’t exactly health care.

This is radio station care where the public option has become throwing radio into the same pool with satellite and online competitors who have already held their noses and settled.

How’s that "playing to the fear that foreign labels will takeover U.S. markets and jobs will be lost" thing working out?

Not well, apparently, because when you live in a glass house you shouldn’t throw stones.

The radio industry doesn’t need foreign labels to take it over -- Wall Street hedge funds and investment banks have already done that.

And the NAB’s argument about killing off U.S. jobs is simply not credible.

No one kills more radio jobs off than U.S. “patriots” like Lew “Tricky” Dickey, "Fagreed" Suleman and John “Slogan” Hogan of Cumulus, Citadel and Clear Channel respectively (if not respectfully).

I mean, what kind of defense is that?

So with head placed firmly up their legal briefs, the NAB is getting closer to handing its constituents a loss on performance royalties that it need not take.

I say this because they are offering the wrong arguments.

Making it seem like radio stations do not want to help starving artists when in fact it is the radio stations that have always helped starving artists -- always have and probably always will.

Without compensation.

You make ‘em, we play ‘em and you keep all the profits -- so, the labels are the ones hurting their own artists (as if we in the industry didn’t already know that).

The NAB can spearhead their own bill and put something patriotic in the title -- like “Freedom of Local Radio Act" and they are still going to lose.

Local radio is dying by the minute -- we never run out of examples. Locals even know this in many smaller markets after a snow storm or weather emergency when their so-called local stations have failed to adequately serve their communities.

So, what is the problem?

Radio should be exempt from the performance royalty exemption because it is a tax.

I know, I know -- the labels say no. But it really is a burden. A percentage levied on stations (above and beyond their present royalty commitments) to squeeze more dollars out of the very people who help the labels sell music.

Therefore, the counter argument should not be about losing jobs -- that’s simply not true.

It should not be about foreigners coming here to one up us -- that’s ridiculous as well.

It won’t help to cry poor mouth either because about half of Congress supports taxing radio and the other half remains steadfastly in radio’s corner. Not enough of a margin.

The real argument is this.

If you repeal the performance royalty exemption from radio, you will be hurting artists and musicians because radio stations will not be able to afford to pay what will amount to an ever increasing additional fee.

And the argument to our lawmakers should be:

"Hey Congress, if you don’t believe us (the NAB), just look what’s happening right now as radio stations are beginning to augment their music playlists with 10% local artists who offer their music to them royalty-free. And if you repeal the performance exemption, it will force some stations to run even more -- or maybe all --- unlicensed music. That wouldn’t be good for the existing record labels at all".

The NAB can’t argue this because they are spending more time playing beltway politics with the livelihood of local radio stations instead of encouraging station owners to give the music industry, their lobby and lawmakers a glimpse of what will happen if they repeal radio's royalty exemption.

The NAB should be encouraging members to add unlicensed artists to their playlists and that means you, Clear Channel -- in big markets. Unlicensed music is not garbage. There’s a lot of good unlicensed music and plenty of starving artists to help if that's what the labels really want.

Record labels aren’t the tastemakers anymore if you’ve been watching the file sharing revolution.

Consumers are.

So I encourage you -- add one or two unlicensed songs each week and send a message to Congress and the labels that they had better be careful what they wish for.

Oh, and you’ll be sending a message to weary radio listeners who are tired of the same “corporate” playlists. You'll be giving them a taste of music discovery -- something they had to turn radio off to find elsewhere.

In the end, you’re going to lose the royalty exemption.

But be smart and win the war -- ensure that if the labels win, they lose. The way it's going right now, if the labels win -- they and radio stations are both the losers -- not to mention listeners.

If the radio industry lets the labels get away with this, they can come back and search my website someday for all the better alternatives they could have taken.

Send Congress a message.

Replace two licensed songs on your radio station playlist with two unlicensed songs each week and if you don’t know what to add -- call in a young person or two and they’ll give you a long list of better alternatives.

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