August 3, 2009

Understanding the Performance Royalty Tax

Many years ago when radio was battling against allegations of payola, an illegal practice in the eyes of the government; an agreement was reached so that radio stations would pay a "tax" to songwriters for playing music on the air. It was also agreed upon that radio would not pay the artist or the performer of the song.

For example if you take a popular song like "For the Love of Money" by The O'Jays, many know as the theme of Donald Trump's Apprentice television show, everytime you hear that song on the radio, the station pays a fee to BMI or ASCAP to the songwriter. So Eddie Levert, Walter Williams, Bobby Massey and William Powell, members of the O'Jays don't see any money from the song. The writers of the song, Kenny Gamble, Leon Huff and Anthony Jackson (a bass player with Philly International Records) are paid when the song is played. You might or might not think that's fair, but that's the way it. However if it's played on Satellite radio, over the internet streaming station or a radio station's webcast, then the O'Jays get paid.

So what fair?

Here's Radio One's Cathy Hughes' position. If an artist is penniless, it's because the record company screwed them over with a terrible deal, not the radio stations! We agree that some of these artists have been taken advantage of so the Black radio owners are working the National Association of Broadcasters and have drafted legislation to establish an endowment of $20 million for artists who are in need. We will help these artists but we're not going to give it to the record companies.

Here's a point of view from the Public Performance Right for Sound Recordings. This arrangement is the result of a long-standing argument made by terrestrial (radio) broadcasters that performers and labels benefit from the free promotion received through radio play. Broadcasters contend that airplay increases album sales, which leads to compensation for performers and record labels. As a result, broadcasters have, for decades, convinced Congress that they should be exempt from paying the public performance royalty for sound recordings. But the broadcasters’ argument is steadily losing relevance, and their exempt status becomes more questionable when compared to other countries’ broad requirements for performance royalties.

Troop, Levert feat. Queen Latifah - "For the Love of Money/Living for the City" from New Jack City. Only Stevie Wonder, Kenny Gamble, Leon Huff, and Anthony Jackson will get paid if this is played on the radio.

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