how stupid RIAA and the Labels are
Posted: Fri Feb 27, 2009 10:09 pmhttp://philadelphia.bizjournals.com/phi ... 1234760400^1777262&page=2
..sigh
Proposed pay-to-play rules fuel resistance in radio land
Federal lawmakers have introduced pay-to-play legislation that, if enacted into law, would levy a performance tax on radio-station operators who play recorded music, with few exceptions.
Executives with some of San Antonio’s largest radio broadcast companies warn that the Performance Rights Act now being spearheaded by Senate Judiciary Chairman Patrick Leahy, D-Vt., and House Judiciary Committee Chairman John Conyers, D-Mich., could put more industry personnel out of work and some stations out of business.
MusicFirst is a coalition of industry players, including the Recording Industry Association of America. It supports the proposed legislation.
MusicFirst Executive Director Jennifer Bendall says the Performance Rights Act represents “the beginning of the end for corporate radio’s loophole.”
“It’s unfair, unjustified and un-American that artists and musicians are paid absolutely nothing when their recordings are played on AM and FM radio,” Bendall argues. “They deserve fair pay for airplay.”
But closing that “loophole” could cost the radio industry billions of dollars annually, according to the National Association of Broadcasters (NAB).
San Antonio-based Clear Channel Communications Inc., in a statement provided to the Business Journal, says: “This is a case of pure greed on the part of the record labels. These companies already get billions of dollars worth of free advertising on the radio. Now they want even more money, and they say this is about fairness?”
Executives with Border Media and Cox Radio, which each operate several radio stations in San Antonio, say the Performance Rights Act is a recipe for disaster.
Border Media Vice President Mark Landis says those artists who support the proposed legislation owe radio some thanks.
“I have the unique perspective having worked on the record company side for 7 years,” Landis explains. “These artists would not have become as successful as they are were it not for radio.
“It’s a trade off,” he adds. “The record companies do everything they can legally do to get their artists airplay. Now they want to charge the radio stations to actually play those records?”
Ben Reed, regional vice president for Cox Radio’s San Antonio market, says broadcasters are already subsidizing the recording industry. “These (proposed Performance Rights Act fees) are in addition to the royalties radio stations have been paying,” Reed says. “And the dollar amounts are potentially staggering.
“It’s important to note,” he adds, “that the record industry is asking radio to pay the record labels for the free promotion of their artists.”
Serious threat
NAB Executive Vice President Dennis Wharton says at least one media analyst has put the potential impact on radio from the proposed legislation at somewhere between $2 billion and $7 billion annually.
Supporters argue that the impact would be much less and that smaller broadcasters would pay less than their larger competitors. In addition, some stations, such as religious broadcasters, would likely be exempted from the fees.
Wharton, however, says the proposed legislation would further impact a radio industry that is already facing an economic crisis and dwindling ad revenues.
Last month, Clear Channel reportedly cut its workforce by more than 1,800 employees. Other broadcast companies have also trimmed their personnel counts.
“If this bill passed, it would decimate the radio business — small and large stations alike,” Wharton tells the Business Journal. “Since Clear Channel is the largest radio station operator in America, the consequences could be devastating.
“It’s pretty simple,” Wharton adds. “Stations’ profit margins are already flat and many radio companies have been laying off employees. If you tack on a huge new fee that goes from local stations to foreign-owned record labels, the station no longer has the capital to pay its employees, to program its shows, to pay its electricity bill, or to re-invest in local community service initiatives. One or all of these would have to be cut.”
Landis says the performance tax “could definitely put some of the smaller operators out of business and cause even the bigger companies to look at making more cuts.”
“San Antonio,” he adds, “would be impacted in a time when advertising revenues are already down year to date.”
Reed says the proposed legislation “would put an unwarranted financial burden on stations.”
The result, he predicts, would be “less people employed and less money spent in our market on goods and services.”
“At the level the record labels, and legislation are pointing, some operators would have a tough time making ends meet,” Reed adds.
Says Wharton, “Make no mistake: This is a serious threat to the future of free, local radio in America.”
..sigh
