Stalemate on terrestrial radio royalties tightens with new Senate bill

On one side of the issue is the poor artist who never sees more than a dime for her work. On the other is the poor broadcaster struggling to earn a profit in a changing radio landscape. And in the middle of it all, as always, is Congress.

Last November, opponents of US House legislation to lift the exemption for terrestrial radio stations from paying performance royalties for recorded music, advanced a draft resolution pledging that the House would never pass such a measure, directly calling such royalties a "fee" and indirectly calling them a "tax." With little change on that front in the House, the stagnation now finds itself being duplicated in the Senate, with a proposal yesterday for an identically worded, possibly non-binding, resolution.

"Resolved by the Senate (the House of Representatives concurring), That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings," reads the principal clause of Senate Concurrent Resolution 82.

Along with the same language comes the same supporters, including Free Radio Alliance spokesperson Cathy Rought.

"Radio isn't just for entertainment; it is a vehicle vital to the circulation of local news and information for the community," reads a statement from Rought's office yesterday afternoon. "When disaster strikes, people turn to their radio for updates and safety. Radio stations also lend a hand in their communities, using the airwaves to help raise funds and awareness for everything from food banks to displaced families...Radio helps record sales, period...S. Con. Res. 82 shows that our elected officials on both sides of the aisle grasp the importance of local radio and resolve to protect it from greedy label-driven initiatives."

The record labels to which Rought refers are the principal supporters of competing legislation, which has also found its way to both houses of Congress, calling for a performers' rights organization -- probably SoundExchange -- to determine fees that should be paid by radio stations earning more than $1.25 million per year. It's a sensitive issue for Internet media as well, especially since the index eventually used to codify terrestrial radio royalties into law -- assuming that happens -- could also be applied to satellite and Internet radio.

The Senate version's principal sponsor, Sen. Blanche Lincoln (D - Ark.), advanced the theory held by the National Association of Broadcasters, that terrestrial radio provides musicians' key source of promotion, and thus has already paid its dues.

"Local radio airplay reaches more than 230 million Americans every week," reads a statement from Sen. Lincoln's office yesterday, "providing an invaluable promotional vehicle for musicians and their record labels. This resolution will ensure that local radio stations across the country can continue to serve listeners without being subjected to additional fees that could diminish the quality of radio programming, including news, weather and AMBER Alert information that at times proves lifesaving."

But Internet radio broadcasters point to data showing a measurable shift in listener attitudes as they steadily adopt services such as Last.fm and Pandora, thus listening to traditional FM less and less each day. The promotional value of Internet radio has also been touted recently, especially for independent artists who might never receive airplay over the airwaves, on the theory that their music wouldn't sell to the mainstream anyway. For Internet broadcasters, no similar exemption resolution appears forthcoming.

Key to either resolution's success, the NAB believes, is how it frames performance royalties as "tax." In a memo to NAB members last November, just after the House resolution was introduced -- as intercepted by the satellite radio industry blog Orbitcast -- NAB President David K. Rehr makes quite transparent the motivation behind this characterization.

"Our opponents dislike the fact that we have framed this issue, appropriately, as a 'tax,"' Rehr wrote. "Despite the fact that enactment of this legislation would be a government mandated levy on local radio, the record labels would prefer to debate this issue as a so-called 'performance right' and you can see why. Members of Congress do not want to support a tax and that is why our message is very powerful."