If the recording industry is somehow successful in imposing a performance royalty on radio stations, the biggest losers will be a category of licensee that is already in short supply – minority owners – which is especially questionable when airplay is its own reward.
Writing for MMTC, Joycelyn James said, “In 2009, MMTC estimated that if performance royalty legislation were passed, it would result in as much as a 30 percent loss in revenue for minority-owned broadcasters, putting approximately one-third of them out of business.”
James notes that advertising has been sluggish for some time, and on top of that many minority owners lose business due to the use of no-Urban or no-Hispanic dictates demanded by some advertisers.
She says that businesses in a daily struggle to survive really cannot weather the imposition of yet another expense.
The advent and proliferation of revenue-sharing agreements between radio groups and recording companies kicked off by the Clear Channel/Big Machine deal is one piece of evidence that a mandated royalty is not needed.
But the biggest reason to avoid a new royalty is that broadcasters are doing the labels a big favor every time they play one of their tunes.
James explained, “Having a song on broadcast radio is the best form of promotion a record label can receive. According to the National Association of Broadcasters (NAB), numerous record label executives – and artists – are quoted as saying that broadcast radio airplay is the key to a song’s success, and as discussed above, radio remains extremely popular. The problem with the proposed performance royalty legislation is that it ignores the relationship between broadcasters and the recording industry. For decades, record labels have relied on radio to promote their music, while radio depended on the recording industry for content. Performance royalties will disrupt this relationship, placing an additional financial burden on broadcasters while artists and recording companies continue to enjoy free airplay.”
She concluded, “It’s time for those who sing the praises of performance royalties to change their tune, allow the market to act, and stop pushing for legislation that is unnecessary and harmful to minority broadcasters.”