When is a Tax Not a Tax?
If you listen to the radio (and I certainly hope you do, we could use the support), I'm sure at one point or another you've heard an ad protesting the so-called "performance tax" that some people want slapped on the radio industry. I'll admit I was concerned about the issue and was at first relieved to know that a majority of House members had signed a pledge not to let such a measure pass.
However, I was uninformed on the issue, and talking to someone on the other side of the issue was quite enlightening. Here's what we're dealing with: When radio stations play a song (or a certain amount of a song), they have to pay the songwriters. It requires paying a blanket license fee to the likes of ASCAP and BMI, the major songwriters' groups, and it also requires filling out a lot of forms. I had to do it as a program director and I HATED it. There was literally a week every six months or so when I had to go through and write out every single song we played and who wrote it. I worked at a music station... we played A LOT of songs in a week. That was one of the biggest problems I had with being management: I'm in radio to create and to entertain, not to fill out paperwork! And don't get me started on what I had to go through every time I tried to hire someone...
Anyway, all these license fees paid by all these radio stations for broadcasting songs goes eventually to the songwriters. That's fine for all the singer-songwriters out there (or the people who own the songs that other people write... *ahem* Courtney Love...), but a lot of artists sing other peoples' songs. So they don't get squat. The excuse made by many of us is, "Well, they make a lot of money by touring, so they're fine." True in most respects, but it also means you have to keep going out and touring to keep the money coming in, especially if you're not making much off album sales. So there has been a push in recent years for broadcasters to have to pony up for performance rights.
This has been tough for the industry to swallow, because they just had to pony up for an extra license to stream music online... this development held back the growth of broadcast stations streaming online because it was an expense they couldn't make up for with online sales. It also killed off most of the "amateur" Internet radio types who were doing it for fun and couldn't afford such a license to continue with what was essentially a hobby. And it's not like the radio industry is making money hand over fist anymore, particularly not during a recession. But this has also led to some misconceptions about having to pay for performance rights.
When this was in the hands of Congress, it was called a "performance tax". Well, this is understandable, as Congress does have the power to tax people and corporations. However, when the money goes straight from the radio station to the performer (or through an intermediary like MusicFirst) and never goes through the federal government, it's not a tax. As an attempt to keep this out of the hands of Congress, the National Association of Broadcasters recently tried to strike a deal with MusicFirst so this could all get resolved without legislation. By cutting the Copyright Royalty Board out of the process, the rate is set by the NAB and MusicFirst without federal interference. Radio industry wonks went apeshit. They accused the NAB of selling them up the river and yelled long and loud that this was indeed a "tax" and a "bailout" for record companies. Well, how is it a bailout for record companies when it's going to the artists? If the record companies try to take any of that money for themselves then that is just wrong. Of course, the record companies haven't exactly endeared themselves to the public with their years of holding back the ability of people to procure music online, most notably by suing 12-year old kids and their grandparents for thousands of dollars.
And the lies keep coming too, like how small stations won't be able to afford this, and how once this is enacted, Congress can raise the rate any time they want. Well as I just said above, Congress and the CRB would be kept out of the rate-setting process with this compromise, so that WON'T happen because it CAN'T happen. So we're getting "the sky is falling" from these people, basically saying that radio will go belly-up as an industry if it has to give up $100M for performance rights. The same person whose insane rant I linked to above has since turned the immaturity level up to 11 by proclaiming that radio should fight back by refusing to play music, or refusing to play major label artists, without some form of legal compensation (since payola is, of course, illegal). Yeah, that's really gonna work... no, young people won't turn off radio for their iPods because radio refuses to play the new Justin Bieber song over some money dispute they don't understand or care to understand. Seriously, this is just juvenile.
This is what it comes down to for all of you whining about the greedy record companies and how much money radio makes for them... the artists who don't write their own songs don't get SHIT. And worse yet, other countries refuse to pay our artists royalties under their nations' laws because we're not paying their artists for airplay. So for every British pop artist who doesn't get paid by our radio stations, the British stations won't pay our pop stars. It's essentially a trade war. Oh by the way, if you're wondering what other nations don't pay their artists for radio performance, it's pretty much us... and Iran. And we know how much they LOVE music over in Iran.
And it gets worse... as part of this compromise, broadcasters want FM tuner chips to be included in cell phones so people can use their phones to listen to radio without having to navigate confusing apps. Don't get me wrong, I've found a couple of pretty sweet apps on the Blackberry (iHeartRadio and Nobex Radio Companion) that get me most streaming stations with good quality, but there are a lot of people who can barely make phone calls, let alone navigate the complexities of your average SmartPhone. So I'm all for it. However, the Consumer Electronics Association is not. They issued a screed that pretty much told the radio industry, "You're dead. Get over it. We already have you covered with digital streaming apps. If people can't get you that way, you're screwed." I see how tough it is to be in an "old media" industry all the time, as my research isn't as sexy as the latest treatise on Twitter, but when the new media industry tells you to drop dead because the train has passed you by, that's kinda hard to take.
In the end, some sort of compromise should be made, because the performers themselves need all the help they can get, cuz they're in a recession too, ya know. Whatever can be done to keep both Congress and the recording industry itself out of the process would be fantastic. But this just goes to show you that once again, any kind of compromise will not be acceptable to some people, and that even though all-out battling could result in a lot of pain for a lot of people, some people are willing to do it just for the possibility that they may win. That it may be quite a pyrrhic victory is irrelevant.
However, I was uninformed on the issue, and talking to someone on the other side of the issue was quite enlightening. Here's what we're dealing with: When radio stations play a song (or a certain amount of a song), they have to pay the songwriters. It requires paying a blanket license fee to the likes of ASCAP and BMI, the major songwriters' groups, and it also requires filling out a lot of forms. I had to do it as a program director and I HATED it. There was literally a week every six months or so when I had to go through and write out every single song we played and who wrote it. I worked at a music station... we played A LOT of songs in a week. That was one of the biggest problems I had with being management: I'm in radio to create and to entertain, not to fill out paperwork! And don't get me started on what I had to go through every time I tried to hire someone...
Anyway, all these license fees paid by all these radio stations for broadcasting songs goes eventually to the songwriters. That's fine for all the singer-songwriters out there (or the people who own the songs that other people write... *ahem* Courtney Love...), but a lot of artists sing other peoples' songs. So they don't get squat. The excuse made by many of us is, "Well, they make a lot of money by touring, so they're fine." True in most respects, but it also means you have to keep going out and touring to keep the money coming in, especially if you're not making much off album sales. So there has been a push in recent years for broadcasters to have to pony up for performance rights.
This has been tough for the industry to swallow, because they just had to pony up for an extra license to stream music online... this development held back the growth of broadcast stations streaming online because it was an expense they couldn't make up for with online sales. It also killed off most of the "amateur" Internet radio types who were doing it for fun and couldn't afford such a license to continue with what was essentially a hobby. And it's not like the radio industry is making money hand over fist anymore, particularly not during a recession. But this has also led to some misconceptions about having to pay for performance rights.
When this was in the hands of Congress, it was called a "performance tax". Well, this is understandable, as Congress does have the power to tax people and corporations. However, when the money goes straight from the radio station to the performer (or through an intermediary like MusicFirst) and never goes through the federal government, it's not a tax. As an attempt to keep this out of the hands of Congress, the National Association of Broadcasters recently tried to strike a deal with MusicFirst so this could all get resolved without legislation. By cutting the Copyright Royalty Board out of the process, the rate is set by the NAB and MusicFirst without federal interference. Radio industry wonks went apeshit. They accused the NAB of selling them up the river and yelled long and loud that this was indeed a "tax" and a "bailout" for record companies. Well, how is it a bailout for record companies when it's going to the artists? If the record companies try to take any of that money for themselves then that is just wrong. Of course, the record companies haven't exactly endeared themselves to the public with their years of holding back the ability of people to procure music online, most notably by suing 12-year old kids and their grandparents for thousands of dollars.
And the lies keep coming too, like how small stations won't be able to afford this, and how once this is enacted, Congress can raise the rate any time they want. Well as I just said above, Congress and the CRB would be kept out of the rate-setting process with this compromise, so that WON'T happen because it CAN'T happen. So we're getting "the sky is falling" from these people, basically saying that radio will go belly-up as an industry if it has to give up $100M for performance rights. The same person whose insane rant I linked to above has since turned the immaturity level up to 11 by proclaiming that radio should fight back by refusing to play music, or refusing to play major label artists, without some form of legal compensation (since payola is, of course, illegal). Yeah, that's really gonna work... no, young people won't turn off radio for their iPods because radio refuses to play the new Justin Bieber song over some money dispute they don't understand or care to understand. Seriously, this is just juvenile.
This is what it comes down to for all of you whining about the greedy record companies and how much money radio makes for them... the artists who don't write their own songs don't get SHIT. And worse yet, other countries refuse to pay our artists royalties under their nations' laws because we're not paying their artists for airplay. So for every British pop artist who doesn't get paid by our radio stations, the British stations won't pay our pop stars. It's essentially a trade war. Oh by the way, if you're wondering what other nations don't pay their artists for radio performance, it's pretty much us... and Iran. And we know how much they LOVE music over in Iran.
And it gets worse... as part of this compromise, broadcasters want FM tuner chips to be included in cell phones so people can use their phones to listen to radio without having to navigate confusing apps. Don't get me wrong, I've found a couple of pretty sweet apps on the Blackberry (iHeartRadio and Nobex Radio Companion) that get me most streaming stations with good quality, but there are a lot of people who can barely make phone calls, let alone navigate the complexities of your average SmartPhone. So I'm all for it. However, the Consumer Electronics Association is not. They issued a screed that pretty much told the radio industry, "You're dead. Get over it. We already have you covered with digital streaming apps. If people can't get you that way, you're screwed." I see how tough it is to be in an "old media" industry all the time, as my research isn't as sexy as the latest treatise on Twitter, but when the new media industry tells you to drop dead because the train has passed you by, that's kinda hard to take.
In the end, some sort of compromise should be made, because the performers themselves need all the help they can get, cuz they're in a recession too, ya know. Whatever can be done to keep both Congress and the recording industry itself out of the process would be fantastic. But this just goes to show you that once again, any kind of compromise will not be acceptable to some people, and that even though all-out battling could result in a lot of pain for a lot of people, some people are willing to do it just for the possibility that they may win. That it may be quite a pyrrhic victory is irrelevant.
Labels: radio
posted by Dave | 2:42 PM
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