Performers Want More Than Air Time
A broad coalition of music industry lobbyists is quietly laying the groundwork for what is shaping up as a major campaign to change copyright law, giving musicians and record labels a windfall at the expense of broadcast radio stations.
Because the effort is still in its planning phase, lobbyists for musicians and the recording industry would speak only on the condition of anonymity. According to numerous sources, several groups plan to pool their resources to push Congress to undo an exemption that allows broadcast radio stations to air songs without paying royalties to the performers. Currently, only the songwriters receive royalties, not the performers or the record labels.
The Recording Industry Association of America, which represents the major record labels and is headed by Mitch Bainwol, is joining forces with groups such as the American Federation of Musicians, the Recording Artists' Coalition, the American Federation of Television & Radio Artists and the Recording Academy, which sponsors the Grammys. Sources said the coalition has been interviewing additional outside lobbyists to work the issue, and already lobbyists have taken their message to the House and Senate Judiciary committees.
Lobbyists in the broadcast industry say they, too, are preparing for a fight, one that sources said would dwarf the National Association of Broadcasters' current attack on the proposed merger between XM and Sirius satellite radio companies. "What's being proposed is something the broadcast industry would fight with everything it has," said one broadcast source.
Dennis Wharton, a spokesman for the NAB, said his group, which is run by David Rehr, is on alert that the RIAA and its coalition allies plan to make a big push on the Hill this year on what he calls a performance tax.
"We will fight that very aggressively," he said. "Broadcasters generate enormous sums of money for record labels by the airplay of their music. Airplay of music works for the benefit of the record labels and their CEOs who live in Hollywood Hills, so obviously NAB will fight this performance tax with a lot of energy."
The RIAA declined comment, and representatives from several artists' groups either declined comment or did not return calls seeking comment.
"Under the tutelage of David Rehr, the broadcasters will be very well prepared in a battle with RIAA and the musicians' associations," said NAB outside lobbyist Dan Mattoon.
Lobbyists on the music industry's side said that even though this issue has long been a priority, the XM-Sirius merger has put a spotlight on competition in the radio industry and given them extra allies in the satellite sector on this issue. Under current law, satellite and Internet radio outlets do pay record labels and artists' performance royalties.
"The other industries who offer radio services are now mature and are able to make the points that only we alone have been able to make up until now," said a music industry source. "And there are other issues on the Hill that have made this relevant," such as the proposed merger.
Since satellite and Internet radio companies pay the fee, music industry sources said that satellite and Internet have been raising an "unfair competition" issue, especially since a proposed merger was announced between XM and Sirius satellite radio companies.
"We're all in the groundwork stages, but this is going to become a massive fight," said a music industry source. "And NAB knows they can't defeat it on the merits."
It could easily evolve into a celebrity-backed campaign with top musicians adding some dazzle to their side of the debate.
"One of the dangers is," said a music industry source, "when we did this in 1995, a couple of country artists came in and really added celebrity power and then they got retaliation letters from the broadcasters. But I think the answer is yes, you're going to see a lot of celebrities who stand up for this."
Wharton said that the recording industry is pushing this measure now "because some of their record sales are down and they're trying to compensate for that by taxing broadcasters."
But several music industry sources said that the only reason the broadcasters have the exemption is because of their industry's powerful lobby.
"Congress has a duty to ensure that all of the rules across the board governing the radio market have to be the same," said a music industry lobbyist. "NAB has never been able to justify why they don't have to pay. It flies in the face of logic, so they're looking at other people to blame."
Added a lobbyist who represents artists: "It's basically like a government subsidy to the broadcasters."
But radio lobbyists say the change would be a huge blow to their industry because it would double their expenses every time they play a song over the airwaves. "Some radio stations may have those margins, but there are hundreds if not thousands that just don't," said a broadcast source.
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