Sunday, May 31, 2009

Performance Rights v. Performance Tax?

A couple of groups representing performing artists - most notably "musicFIRST" have gained enough support to get HR 848...the Performance Rights get out of Committee and onto the House floor. Representative John Conyers (D-MI) is the main sponsor. A similar bill in the Senate has support from Senator Patrick Leahy, Barbara Boxer and several others.

What's this all about? A group of artists is complaining that AM and FM radio (mostly FM, of course) play their music without compensating them. They claim that radio rakes in $19 billion a year by playing their music and they get bupkus.

The NAB - National Association of Broadcasters - and radio stations across America have responded with the Local Radio Freedom Act, designed to insure that local radio stations can continue to play music without an exorbitant Performance Rights Tax.

Who's telling the truth here?

The facts of the matter are these: Radio has, for decades, enjoyed an exemption from paying performance rights to artists because of the inherent benefit to the artist that radio airplay generates. Ask any artist if he or she would like to have a song hit #1 on the charts? 99% will say, "absolutely!" The benefit of a #1 song - or anything in the top 10 - is legendary.

How do you hit #1? The charts are based on radio airplay. The song that is played the most in a given week - or "gets the most spins" as the industry says - is #1. Simple as that. So if you don't get played on the radio, you never hit number one... or, for that matter, number anything.

Radio airplay makes stars out of artists. Even one-hit wonders. Ever hear of the Bellamy Brothers? They had a #1 song in 1976, "Let Your Love Flow" that is currently in use on a national TV spot for the Toyota Prius. That was the only hit they ever had, and it went to #1. What about Percy Sledge? He wrote and did the original version of "When a Man Loves a Woman" in 1966.

The reach of radio is astronomical. 94% of all households in America hear the radio every week. That's approximately three times as many as use Google in a week. Think about that for a second.

Is it true that radio pays nothing for the music? No. Radio pays annual public performance royalties in the millions to BMI (Broadcast Music, Inc.) and to ASCAP (the American Society of Composers, Authors and Producers). I'm not talking millions for the whole industry, I'm talking about 3-4 million to both BMI and ASCAP for one major market station. Add another $60,000 or so for SESAC, a licensing company whose only Pop hit was CW McCall's "Convoy" in 1976.

So what's the problem? The problem is that the substantial fees that radio pays to BMI and ASCAP go to the songwriters and producers, not the artists. This is the way the labels set it up years ago.

How much of a tax are we talking? It's supposed to be .008 cents per performance. Doesn't sound like that much. But understand that a "performance" is any time anyone hears a song (or portion thereof) on the radio. Let's do the math for a moment. Take a major market music-based AC station that plays an average of 12 songs per hour. Multiply that times 24 hours, then by 7 days a week, times .008 cents. Then multiply that by the station's average weekly audience, which is 1.3 million people. The answer is staggering. And that's just for one station. And that's on top of the 6 or 7 million already paid to BMI and ASCAP.

What's more, this is in an economy where local advertising is off by over 20% and many stations have resorted to nationally syndicated programming. Other than top tier stations in major markets, it's a struggle, and many local radio stations won't be able to afford it.

What type of artists are waving the musicFIRST flag? Artists who aren't getting any airplay, that's who. Maybe they had a hit or two back in the day, but time has passed them by. Today there's a Town Hall-style meeting in Detroit where a couple of artists representing musicFIRST will debate the issue with local radio stations. The artists are Dionne Warwick and Martha Reeves of the Vandellas. Dionne's last hit was 25 years ago. Martha's was over 40 years ago. The other supporters of HR 848 are emerging acts that have yet to emerge. If radio has to pay a tax for every song played, getting airplay will be tougher, not easier. Program Directors will be loath to spend money playing a song that does not have a proven track record of audience appeal. Why take a chance? There's an old radio adage that goes, "What you don't play won't hurt you." Another one says, "Shut up and play the hits."

The artists should focus their attention on ASCAP and BMI..and get them to split the songwriter proceeds with the singers. Don't try to make an adversary out of radio.

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