Performance Fee moves forward


As expected, The Performance Rights Act easily cleared the House Intellectual Property subcommittee yesterday – a panel dominated by supporters of RIAA. The measure faces a less-certain future in the full House Judiciary Committee. If it gets to the full House, a majority of members have told NAB they will oppose the bill, which would require radio stations to pay royalties to record labels and artists.

In an effort to blunt criticism that most of the money will just head overseas to the foreign-based record companies, Rep. Howard Berman (D-CA) added an amendment to his own bill to ensure that music artists actually get some of the cash. It requires broadcasters to send 50% of their performance fee payments to SoundExchange for distribution to artists, “rather than have that portion pass through the labels and potentially be recouped.” (Editor’s note: Even the RIAA’s biggest backer on Capitol Hill seems to have some doubts about whether the record labels can be trusted!)

Berman insists that small broadcasters won’t be harmed by the legislation, nor non-commercial stations, since their fees would be capped. Stations with revenues of less than $1.25 million per year would pay a flat rate of $5,000 per year and non-commercial stations, regardless of size, only $1,000. Of course, that’s still an increase from the current rate of zero.

"Today’s vote comes as a complete non-surprise, given the House IP Subcommittee’s history of support for the RIAA-backed tax on local radio stations. Despite today’s action, there remains broad bipartisan resistance to the RIAA tax from members of Congress who question whether a punitive fee on America’s hometown radio stations should be used to bail out the failing business model of foreign-owned record labels," said NAB Executive Vice President Dennis Wharton.

With the deck stacked against in the subcommittee, NAB has been focusing on lining up broad opposition to the point where it now has a majority of House Members committed to opposing the Berman bill and signed on as co-sponsors of the rival Local Radio Freedom Act, which would prohibit charging a performance rights fee to local radio stations. The battle now moves to the full House Judiciary Committee, where prospects for Berman’s bill are uncertain.

RBR/TVBR observation: The bottom line is that this legislation is not going to become law in 2008. NAB has the votes committed to block that from happening. The real worry for broadcasters is whether this is Berman’s last hurrah, since he will be moving to a different chairmanship next year, or will the RIAA be able to keep building momentum by trotting out golden oldies artists who want some money and downplaying the payments to the multi-national record labels?