How Italian Radio Fights Royalty Taxes

The other day when I was writing about the NAB plan to surrender to the music industry over a radio tax, one of my readers wrote to tell me about what is going on in Italy in a similar situation.

I thought you might be interested.

It might also serve as an example of how the U.S. radio industry can stand up to the RIAA that has suddenly crawled into bed with your very own NAB.

Mark my words, a handful of “elected” NAB board members are going to saddle the radio industry with $100 million in new royalty taxes after employing a fear campaign that is, sadly, being led by Gordon Smith, NAB’s ex-senator and soon to be ex-NAB chief if that royalty tax goes through.

Over the past few months hardly any new music from Italian artists has been played on Italian radio stations.


I know we Italians can be stubborn.

But the principled (now that's a better word for stubborn) Italian stations are shutting the new artists off the airwaves to protest the exorbitant rights fees that the labels are asking radio stations to pay.

Sound familiar?

The tax part -- not the station reaction to the tax.

I am told by a source:

“From what I understand a rights fee has been in place to labels but the agreement ended in'06 and no new agreement could be reached. Here is where it gets interesting: The Italian labels that are subsidiaries of global labels have had their International label counterparts not allow Italian Radio to play any music or to interview international artists, including all of the International artists touring in Italy.

“So when Train was recently in Rome they were told during the interview by the station talent (who is bilingual) that they were not allowed to play their latest single because the label prohibited them in retaliation for their protest to rights fees, so Italy has not heard their new song.

“The Italian label PR guy went berserk that the talent shared the label ban on playing any new international artists. So the band said if you can't play our songs we'll give you the OK to play us singing the song live...Gotta love the labels that are holding artists hostage to radio stations without the artist knowing about it...”

Our NAB is playing with tempest in a teapot with fear mongering that the CRB will come get them and that the industry is wasting its money fighting this futile fight. Wasn’t it the NAB that reassured its members for years that it had everything under control and Congress was on their side?

This is not a retreat. It's a surrender.

So in Italy the entire local radio market has ground to a halt when it comes to breaking new artists while negotiations get nasty between the sides.

Contrast this to Benedict Arnold Smith, a radio outsider at best, asking a “town meeting” last week how long does radio want to spend its money fighting the music industry when it can pay a real low, low price like $100 million to settle?

To Smith apparently all of a sudden fighting against the royalty is no longer cost-efficient. That may work for an ex-senator with no radio background, but owners know better.

Now look closely at the Italian situation where that danged 1% solution that Smith is throwing around has come back to burn radio stations. Once the Italian stations gave in to 1% -- guess what? Now the labels want 2%. Funny about that since the NAB sweeps that possibility under the rug.

Both sides in the Italian dispute had an agreement where the stations paid the same 1% of their revenue that NAB CEO Smith wants you to pay to the collecting society representing labels and recording artists. That deal expired in 2006 and since then the Italians have stepped up the fight and turned off access to their stations.

After all, radio is promoting music acts for free and breaking new ones. Why should radio be taxed beyond the publishing fees they already pay?

In spite of what the NAB says about their new best buddies, the RIAA, that 1% tax is now going to 2% if the labels in Italy get their way.

The Italian stations laid down “a claim” disclosing the record labels to claim no royalties at all on new releases that are sent to stations as promos. The outraged labels then decided to cut off their noses to spite their faces by not putting out any new releases.

I guess the lesson is you never want to get an Italian mad. Read this account of how the radio stations there are fighting for what is right.

EMI calls it all blackmail.

Call it what you like but there are a lot of lessons for American radio stations here.

1. Don’t let the NAB negotiate this deal. Gordon Smith appears to be buddying up to his old senate pals who support additional music taxes. To a man who has never run a radio station his NAB is playing with the house’s money – your house!

2. Radio really does have the upper hand. Don’t play their music and the labels cannot survive. This issue goes away that quickly.

3. Not one – not even one -- radio CEO is standing up in public to challenge the NAB or to lead his or her brethren to resist the screwing they are about to get.

It is so obvious that radio doesn’t deserve this tax.

Doesn’t deserve to be sold out by the NAB and the ex-senator running it.

But it is happening because until this moment no one is willing to lead.

Sound familiar?

That’s how consolidation took root.

So I ask – is there one radio exec out there willing to stand up and fight like the Italians?


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