Saying it would disrupt the equilibrium of the decades-old partnership between the radio and music industries and disproportionately affect minority-owned stations, the Media Institute released a paper explaining its opposition to the Performance Rights Act.
“A proposed compulsory-license scheme that would force radio broadcasters to pay royalties to musical artists and record labels would impose an undue economic burden on broadcasters already racked by the recession,” summarized MI. “In addition, the plan would likely reduce broadcast radio diversity, especially among small and minority-owned stations.”
The MI paper, written by Richard T. Kaplar, notes that the value of the promotion generated by free airplay is estimated at $1.5B-$2.4B in annual sales of recorded music. He suggested that it is hardly fair to put an additional charge to broadcasters on top of the value they are already providing at no cost to the labels.
Indeed, that has been the longtime bargain between the two industries, free airplay for free promotion. MI said, “Imposing a royalty scheme on broadcasters would not only upset this equilibrium, but would likely force a significant number of stations into bankruptcy or off the air altogether. Black and Hispanic stations, many of which already struggle for ad revenue and financing, would bear the brunt of compulsory “performance fees” for sound recordings.”
MI said that an ironic effect of PRA, with its graduated payment scale, would be to force small stations, many of which provide minority programming, to stay small and avoid moving up from the $5K blanket fee to a percentage-of-revenue fee, a wildcard expense the prospect of which could be counted upon to chase away financing.
Kaplar concluded, “Record companies should not try to kill the ‘golden goose’ of radio broadcasting in an effort to boost their bottom lines. Free music for free airplay has stood the test of time. It’s an arrangement that is not broken, and does not need to be ‘fixed.’”