March 30, 2009

Performance Tax Opposed by Small Market Radio Stations

Last week, Black broadcasters met in Washington, D.C. to discuss the possibility that a Performance Tax would cause them to go into bankruptcy. Now many small market broadcasters are facing the same dilemma, if the proposed tax is put into place by congress, you might see many stations simply go dark.

As it stands now, Sirius XM satellite radio; Radio stations that stream online; Internet music services like AOL Radio, Last FM, Imeem, Pandora, and Finetune; and music download sites like iTunes, pay the artist a royalty fee.

Terrestrial radio has never paid the artists or performers for the music they play on the air. They do pay royalties to the composer of the songs to SESAC, BMI, and ASCAP. The Recording Industry Association of America (RIAA) wants that to change.

Here are some good points made by radio people who want to keep things the way they are: Radio has always been a promotional tool for the record industry. Since the 1950's, radio generated record sales and let the music buying public hear the latest songs that they would eventually want to buy. It's not radio's fault that the record industry did not anticipate the explosion of downloading music from the Internet and the decline of record and CD sales. Radio feels that they should not be forced to pay for something that they have been allowed to do for free for many years in order for record companies to recoup losses.

This is an interesting issue that may cause only the large conglomerate owned radio stations to survive and force smaller stations to play more "indie" music or become talk stations.

By the way: Rumors have it that the music streaming service Imeem is about to shut down. A source says that Imeem owes the labels as much as $30 million to date with no hope of paying any of it. Imeem says that is “extremely innacurate,” but confirms that they are playing “in excess of a billion songs and videos per month.”

The Finetune service seems ready to shut down also and have disable users the ability to edit and add music to their playlist. The problem they have is the more people that listen the more they have to pay.

1 comment:

  1. You stated:Radio has always been a promotional tool for the record industry. Since the 1950's, radio generated record sales and let the music buying public hear the latest songs that they would eventually want to buy. It's not radio's fault that the record industry did not anticipate the explosion of downloading music from the Internet and the decline of record and CD sales. Radio feels that they should not be forced to pay for something that they have been allowed to do for free for many years in order for record companies to recoup losses.

    Part of the deal with downloading is that in the last 10 years, the record labels made the choice not to release songs that radio was playing, forcing long-time buyers like myself to download. As people became accostomed to getting music for free, they spent less on marginal releases and only paid for cds full of hits. Also, radio plays less and less new music, and the net has more and more new music than most people can listen to in a day, so they don't listen to as much terrestial radio, causing a loss in ad revenue. Rinse lather repeat.....they caused their own downfall, so they should not be upset that the chickens came home to roost.

    ReplyDelete

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