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Area radio broadcasters criticize royalty bill: E-mail this story to a friend
[June 04, 2009]

Area radio broadcasters criticize royalty bill: E-mail this story to a friend

Jun 04, 2009 (The Hutchinson News - McClatchy-Tribune Information Services via COMTEX) -- Kansas congressmen joined more than 200 of their peers in the U.S. House of Representatives in opposing legislation to require that radio stations pay royalties to performers when playing their songs.

On Wednesday the number of House members who opposed the Performance Rights Act reached 218 -- the number needed to effectively block the legislation.

Still, the National Association of Broadcasters is pushing for even more House -- and U.S. Senate -- opposition to the bill, which already has passed out of the House Judiciary Committee by a 21-9 vote, saying there is strength in numbers.

"If we can demonstrate an even greater number of supporters for our side, it sends a very powerful message to House leadership that it would be a mistake to try to bring this bill up for a full floor vote," said Dennis Wharton, executive vice president of media relations for the National Association of Broadcasters.

The NAB also is trying to line up opposition to the version of the bill that still resides in the Senate Judiciary Committee. So far, 12 senators have voiced their opposition, including Kansas Sens. Sam Brownback and Pat Roberts.

Wharton added that his organization would continue to be vigilant in ensuring that the performance rights act is not attached as an amendment to a piece of "must-pass" legislation.

Local station leaders have said if the performance rights act were allowed to pass into law, it would sink radio stations that are struggling in the current economy, leave many new artists undiscovered and put asunder an 80-year mutually beneficial relationship between radio stations and performers.

Promoters of the bill argue that the act closes "an archaic provision of America's copyright law that allows AM and FM radio stations to earn $16 billion a year in advertising revenue without compensating the artists and musicians ...," according to a press release from the Recording Industry Association of America.

Proponents say that while radio stations generate income by playing artists' songs, the artists -- especially those who have fallen out of the public spotlight -- receive no compensation for it. Finally, they say this legislation will bring terrestrial radio stations in line with other music outlets -- such as Internet streaming services and satellite radio, which are required to pay performance royalties.

Strong opposition Cliff Shank, president and owner of Ad Astra Per Aspera Broadcasting, Inc., which owns FM stations KSKU 94.7, KNZS 100.3 and KXKU 106.1, said he is "100 percent" opposed to the new legislation.

"It's something that really makes me angry," he said. "For the entire history of radio, there has been a great win-win situation where we play the performers' music for free and in return basically give them a free commercial. They become popular, sell lots of music, and become millionaires and billionaires." Shank, who is a past chairman of the board for the Kansas Association of Broadcasters, added that instituting a performance royalty for stations, which already pay a royalty to song authors and composers, is both a bad idea and unethical.

"The authors and composers really aren't the Paul McCartneys of the world, so I can understand how they should be compensated in that way, but the performers thing is just a total rip-off," he said. "It's kind of like stealing from the poor to give to the rich. It's the opposite of Robin Hood." He added that the current economic situation makes the additional fee even more of a hardship.

"The fact that they are even considering something like this at a time when, I would guess that nationwide maybe as many as two-thirds of radio broadcasters are struggling to make ends meet, is just wrong," he said.

If the performance rights tax were to be passed into law, stations would pay a royalty to play performers' songs.

The Performance Rights Act includes a provision that allows noncommercial radio stations, including educational, public and religious stations, to pay an annual fee on a sliding scale based on size. Noncommercial stations that gross less than $100,000 per year would pay a $500 annual fee, and noncommercial music stations that gross $100,000 or more pay a $1,000 annual fee.

Similar relief is offered to small and mid-sized commercial radio stations. Commercial stations that gross less than $100,000 per year would pay a $500 annual fee. Those that gross between $100,000 and $500,000 would pay a $2,500 annual fee, and those that gross between $500,000 and $1.25 million pay a $5,000 annual fee.

Large radio companies like Clear Channel Outdoor Holdings and Cox Radio Inc. would pay negotiated royalties to be set by the U.S. Copyright Royalty Board, a part of the Library of Congress. Royalties would be split between the artists and their record labels.

Cable, satellite and Internet radio already pay performance royalties.

Mark Trotman, general manager of FM stations KHUT 102.9 and KHMY 93.1, agreed that the performance rights tax would be a burden.

"The impact on radio will be multimillions of dollars," he said. "And this is the most challenging time that we've experienced in the last 25 to 30 years." Both Trotman and Shank said they expect many stations that are only marginally profitable to switch to an all-talk format, which would be less expensive.

But both Trotman and Shank added that their stations would be able to weather the fees.

"I feel very blessed by the Hutchinson economy," Shank said. "I always say -- sometimes it is kind of good and sometimes it is kind of bad, but we'll never be boom town and we'll never be a bust town. We're kind of in the middle." Cyclical relationship Radio stations make money off of the advertising they receive. The more popular the station, the more likely businesses will advertise with it. At least part of a station's popularity comes from its ability to play popular music that people want to hear.

Artists make the majority of their money off of their concerts, merchandise sales and endorsement deals. The more popular the artists, the larger their concerts and the more endorsement opportunities they have. At least part of an artist's popularity comes from being promoted on the radio.

Record companies make the majority of their money off the sale of CDs. The more popular the artist's album, the more CDs are sold. At least part of an album's popularity comes from radio promotion.

To see more of The Hutchinson News or to subscribe to the newspaper, go to Copyright (c) 2009, The Hutchinson News, Kan.

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