The Performance Rights Act

The Performance Rights Act has created quite a bit of attention. The act is one that will force radio stations to pay record labels a tax for the privilege of playing their music. This proposed act has everyone in an uproar. I am concerned because I am a broadcaster who consults both music and Talk radio stations. Our Talk stations may benefit from it, but only from the standpoint that more stations may go Talk versus paying such a tax.

However, I do not see this as a "either or" situation. Every market can stand to have one or two FM Talk stations. The opportunity to expand the Talk format is excellent. That's a topic for a different article, and you can read much more about it in the News/Talk section of our site at www.mcvaymedia.com.

The Performance Rights Act (PRA) is one that's been implemented in many other countries such as the United Kingdom, Canada, Australia and New Zealand. In many of those countries it is known as "The Neighboring Rights Act." It doesn't matter how you look at it, it's a tax that record labels will benefit from more than the artist.

Those of you who are not familiar with the "fuzzy math" of the record labels need to know that the artists are charged for everything. They pay for a percentage of electric in the various offices around the country, for private jets and jet fuel flown by the executives, promotion and marketing, tickets for their own shows and videos, the production of the record, etc. Artists make about 99 cents per effort for every $10 billed.

During their recent induction into the Country Music Hall of Fame, Brooks & Dunn both acknowledge the part that radio has played in their millions of dollars earned. Kix Brooks said, "If it wasn't for radio no one ever would have heard my music and I'd never have been successful." Ronnie Dunn joked, "I'd like to thank radio also for my mansion, my farm, all my cars and my plane."

The successful and relevant artists "get it." The opportunity exists for the record labels to utilize the Performance Rights Act to "apply" funds to expenses versus paying what is due the artists. They may use these funds to slow the blood flow from their books. The artists will once again be taken advantage of.

The latest is that Nancy Pelosi has come out in favor of the Act and says that she will push it through much like the Health Care Bill. You can rest assured that even more special interest items will be added to this bill than were added to the Health Bill. It is sad we are in a situation whereby the artists and the radio stations will both lose money. My friends in Canada (performance artists who sold millions of records) have seen almost zero dollars from their version of the Performance Rights Act.

What seems to be lost on everyone in Congress and the Senate is that not one major record label is owned by an American company. This tax, imposed on U.S. owned and operated radio stations, will benefit off-shore businesses. No on-shore businesses will benefit.

The other question not being asked is "Where are the TODAY artists in this fight?" The artists who are being paraded before Capitol Hill are those that haven't had a hit on the radio in many years. Ask yourself why that is the situation.

The TODAY artists understand that if it wasn't for radio, they'd have zero success. Name for me the artists you can think of that have become huge stars because of the Internet. Who can you say had zero airplay -- only Internet exposure -- and became successful? There is one artist I can think of who was buoyed by the Internet, but their success was then accelerated to new heights by television and radio.

Sooner or later we'll see the Congress and the Senate roll over radio and impose the Performance Rights Act. The National Association of Broadcasters is fighting against this bill, tooth and nail, but the battle is a tough one to wage. Both their staff and volunteers deserve quite a bit of credit.

Unfortunately, this bill will come back year after year until it is finally passed. When that happens, let's hope that the NAB can convince the government that there should be a compromise. There should be a partnership with labels, where radio matches the labels dollar for dollar, as to what actually goes into this fund for the artists. Then let's see if the artists benefit or not. They should benefit! I'm not arguing that. The fund should be managed by an agreed-upon director, and the money should truly be delivered to the performers. I am arguing that the off-shore record labels should be stopped from taking advantage of both the performers and the broadcasters.