The Performance Rights Act: A look inside terrestrial radio’s dilemmas

The recent addiction of downloading music off the internet has upset the flow of royalty fees and has artists and labels searching for new avenues of revenue. One such recent development on their part has been the proposal of a new “performance fee” tax that radio stations would be obligated to pay record labels each time one of their client’s (artists) songs gets air-time.

Under current laws radio stations are required to pay the songwriter but the new suggested law would also require them to pay royalties to holders of the copyrights on recordings, which may include performers and record labels.

The proposed bill H.R. 848 known as the Performance Rights Act would extend current royalty rights to include audio transmission. As they currently stand the royalty laws only cover digital transference but H.R. 848 would allow copyright umbrellas to also encompass audio broadcasts by analog radio stations.

The new bill, which has yet to be voted on by congress would enforce a tax to be paid to copyright holders each time a radio station plays one of their tracks. The exact fee has not yet been established but smaller stations with accruing annual revenues of $1.2 million dollars and under would have the option to pay a flat fixed rate yearly in lieu of continuously occurring royalty payments.

With free local radio currently reaching around 236 million listeners every week many proponents of the old system believe that free air-play is a fair trade for such vast exposure. And although the new tax is said to be for the benefit of artists and musicians (and this is true … in part) it is likely that at least half of the new found revenue would go to the record labels, the majority of which are foreign owned companies. While newer artists are more likely to suffer from lack of exposure than benefit from tax dollars.

The traditional agreement between artists, record labels, and radio stations has been upset due to the strong and steady decline in profit margins seen recently in the music industry. A predicament due without question to the newly digitized world in which many fans opt to download their music free of charge rather than purchase whole albums at the record store. An occurrence that has become so prevalent that indeed there are very few record stores even in operation anymore, which further promotes downloading.

But many opponents of the proposed bill point out that this decrease in profit is not the fault of terrestrial radio stations and thus they should not be the ones to suffer the financial burden of a newly found tax that seeks to disrupt a system that has worked well for over 8 decades for radio and artists alike.

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– Amanda Decker


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