NAB opens fire on RIAA royalty drive


WASHINGTON -- Broadcasters stomped all over a new effort to get Congress to enact legislation that would pay musicians for radio and TV airplay, calling it a "performance tax."

Broadcaster reaction came as the push for a performance royalty, by scores of musicians, the record labels and musicians unions, officially kicked off Thursday with the creation of the musicFirst coalition. The coalition hopes to convince Congress to create a performance right for sound recording for U.S. airplay for the first time. While musicFirst argues that the new royalty would undo a gross inequity, it could mean millions to musicians and record labels.

"A performance right for artists is long overdue as hundreds of millions of dollars that rightly belong to copyright owners and creators continue to go unpaid," Recording Academy president Neil Portnow said. "The time has come for Congress to correct this historic inequity and for U.S. radio stations to join the rest of the industrialized world and compensate artists for using their works on the air."

Unlike other countries, American terrestrial broadcasters have traditionally paid songwriter royalties to ASCAP, BMI and SESAC, but have been exempt from performance royalties similar to those levied on digital broadcasts in recent years.

Most people in the music industry think that allowing broadcasters to escape paying a performance royalty is unfair. Broadcasters argue that the promotional value gained by playing music on the radio more than offsets any royalty that performers and record companies would receive.

"Congress has long recognized that radio airplay of music generates millions of dollars in revenue for record labels and artists," said NAB spokesman Dennis Wharton. "Were it not for radio's free promotional airplay of music on stations all over America, most successful recording artists would still be playing in a garage."

Wharton said the association vowed to fight the proposal.

"NAB will aggressively fight RIAA's proposed performance tax on local radio stations," Wharton said.

While getting the new royalty through over NAB opposition in the past would have been unthinkable, the association's clout, while considerable, isn't what it's been in the past. Record industry executive believe that they have a window of opportunity they don't want to miss.

"To call it a tax is really diversionary. No one on the Hill will buy that argument," RIAA chairman and CEO Mitch Bainwol said.

Broadcasters may have been able to rationalize the airplay argument 30 years ago, Bainwol said, but in the modern world where cable, satellite and Internet-delivered music requires a performance royalty, broadcasting gets "an exemption that sticks out like a sore thumb."