The Massachusetts Broadcasters Association has signed on, along with the other fifty states, to a resolution in opposition to any new “performance tax.” The full text of the resolution can be read below.
RESOLUTION OF THE FIFTY STATE BROADCASTERS ASSOCIATIONS, INCLUDING THE DISTRICT OF COLUMBIA AND THE COMMONWEALTH OF PUERTO RICO, IN OPPOSITION TO A NEW “PERFORMANCE TAX”
WHEREAS, the recording industry wants Congress to mandate, for the first time ever, a public performance obligation for the over-the-air broadcast of recorded music delivered, free of charge, to the listening public by our Nation’s local radio stations so that the recording industry can extract from such stations billions of dollars on top of the wealth already enjoyed by the record labels and their performers;
WHEREAS, this proposed, public performance obligation is regarded by local radio stations as the equivalent of a Congressionally mandated “performance tax” proposed for the sole benefit of the recording industry;
WHEREAS, local radio stations already contribute as much as $2.4 billion in value annually to the record labels and their performers by promoting their recorded music, their concerts, their merchandise and their careers to an average of 239 million listeners per week;
WHEREAS, the “performance tax” will (i) undermine radio broadcasting’s first-responder, lifeline, alerting and informational role in every community in America, and (ii) frustrate the goal of increasing program diversity as well as minority and female ownership in broadcasting by:
a. Forcing local radio stations that have already cut their operating expenses to the bone either to change from a music to a talk format in order to avoid foreclosure and going dark;
b. Forcing local radio stations that must remain music-based to survive, to further reduce news departments, eliminate even more jobs, reduce their hours of operation or air less costly syndicated programming in lieu more expensive locally originated programming;
c. Forcing local radio stations to abandon niche music formats in favor of formats that appeal to the largest audiences with the greatest revenue generating potential, thereby reducing program diversity and narrowing the opportunities for new artists through free airplay; and
d. Imposing a new, unbudgeted operating cost that could place many local radio broadcasters in breach of their financing covenants and thus in default under their loans, and that could prevent newcomers to broadcasting from being able to obtain financing;
WHEREAS, the record labels and performers possess no equitable justifications for placing at such substantial risk both our Nation’s commitment to competition and diversity in broadcasting as well as our Nation’s local, first responder radio stations:
a. The record labels and performers have repeatedly admitted how critical local radio stations are to the welfare of the recording industry and their performers:
“If a song’s not on the radio, it’ll never sell.” – Mark Wright, Senior Vice President, MCA Records, 2001 “It is clearly the number one way that we’re getting our music exposed. Nothing else affects retail sales the way terrestrial radio does.” – Tom Biery, Senior Vice President for Promotion, Warner Bros. Records, 2005.
See Attachment A hereto for more testimonials confirming the extraordinary value contributed by local radio stations to the recording industry;
b. Congress has looked at the issue of performance fees at least three times previously (1971, 1976 and 1995) and concluded that such fees would jeopardize “the mutually beneficial economic relationship between the recording and traditional broadcast industries” (House Report 104-274, 1995); and
c. The record labels and their performers do not need a government “bailout” at the expense of local radio stations. In fact, the U.S. recording industry, with no “performance tax,” is larger than that of the United Kingdom, France, Germany, Canada, Australia, Italy, Spain and Mexico combined, all of which have “performance tax” regimes; and
d. Furthermore, there are no pools of funding at radio stations to draw from to pay these “performance taxes.”
WHEREAS, there are no public policy justifications that would support placing at such substantial risk our Nation’s commitment to competition and diversity in broadcasting and our Nation’s local first responder radio stations:
a. The fact that music license fees are paid to ASCAP, BMI and SESAC by local radio stations does not justify a “performance tax” for the recording industry because the composers are generally not promoted whereas local radio stations routinely promote performers by name, as well as their songs, concerts, and merchandise to the great advantage of performers;
b. The fact that fees are paid by subscription-based technologies, such as satellite and Internet radio, to the record labels and performers does not justify a “performance tax” on local radio stations because (i) as Congress has itself found Internet and satellite radio providers threaten the sales of recorded music through digital downloading whereas local radio stations enhance sales without posing such a threat, and (ii) subscribers actually pay those providers for the recorded music delivered into their homes, offices and vehicles; in contrast, local radio stations air the music for free; and
c. The fact that some foreign countries acknowledge a performance right in the over-the-air broadcast of recorded music does not justify a new “performance tax” on local radio stations in the United States because
(i) performance fees in foreign countries actually benefit government-owned stations to the detriment of privately-owned stations (the former enjoy increasing government subsidies while the latter do not enjoy any subsidies) and have resulted in fewer radio stations (less outlet diversity) and fewer distinct formats (less content diversity);
(ii) “performance tax” revenues from radio stations in foreign countries are disproportionately allocated to record labels and highly-successful artists; and
(iii) the subject of performance rights cannot be properly evaluated without taking into account other related issues, e.g., durations of copyright protections (95 years in the U.S. and only 50 years in Canada and many European and Asian countries) and piracy enforcement; and
WHEREAS, targeting local radio stations with a “performance tax” would violate principles of fundamental fairness without (i) including the numerous other businesses which use recorded music for their customers and (ii) taking into account the one-half billion dollars paid annually by local radio stations to composers (and an increasing number of performers) and music publishers through ASCAP, BMI and SESAC:
a. The recording industry is using a divide and conquer approach for its legislative strategy that leaves out other businesses, such as bars, restaurants and hotels, which, under the recording industry’s own logic, should contribute their share to any “performance tax” pool sought by the recording industry;
b. Without all potential contributors included, it would be impossible to determine the reasonableness of the “performance tax” pool sought by the recording industry or a fair allocation of liability among contributors; and
c. Since the value of the work of a performer is inextricably intertwined with the value of the work of the composer whose work is being performed, logically their relative worth in relation to a performance should be examined with the effect that compensation under music licenses should be re-examined in connection with any compensation that would flow from a “performance tax” if such tax were imposed.
Resolved this 20th day of May, 2010, by the fifty (50) State Broadcasters Associations named below, including the District of Columbia and the Commonwealth of Puerto Rico, That Congress should not impose any new performance fee, tax, royalty, or other charge relating to the public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air, or on any business for such public performance of sound recordings.
Alabama Broadcasters Association, Alaska Broadcasters Association, Arizona Broadcasters Association, Arkansas Broadcasters Association, California Broadcasters Association, Colorado Broadcasters Association, Connecticut Broadcasters Association, Florida Association of Broadcasters, Georgia Association of Broadcasters, Hawaii Association of Broadcasters, Idaho State Broadcasters Association, Illinois Broadcasters Association, Indiana Broadcasters Association, Iowa Broadcasters Association, Kansas Association of Broadcasters, Kentucky Broadcasters Association, Louisiana Association of Broadcasters, Maine Association of Broadcasters, MD/DC/DE Broadcasters Association, Massachusetts Broadcasters Association, Michigan Association of Broadcasters, Minnesota Broadcasters Association, Mississippi Association of Broadcasters, Missouri Broadcasters Association, Montana Broadcasters Association, Nebraska Broadcasters Association, Nevada Broadcasters Association, New Hampshire Association of Broadcasters, New Jersey Broadcasters Association, New Mexico Broadcasters Association, The New York State Broadcasters Association, Inc., North Carolina Association of Broadcasters, North Dakota Broadcasters Association, Ohio Association of Broadcasters, Oklahoma Association of Broadcasters, Oregon Association of Broadcasters, Pennsylvania Association of Broadcasters, Radio Broadcasters Association of Puerto Rico, Rhode Island Broadcasters Association, South Carolina Broadcasters Association, South Dakota Broadcasters Association, Tennessee Association of Broadcasters, Texas Association of Broadcasters, Utah Broadcasters Association, Vermont Association of Broadcasters, Virginia Association of Broadcasters, Washington State Association of Broadcasters, West Virginia Broadcasters Association, Wisconsin Broadcasters Association, and Wyoming Association of Broadcasters.