Performance Tax Back in the News

Not surprisingly, record label representatives were pleased when a Washington, D.C., think tank this week released a report that appeared to buttress their call for government action to impose new royalty fees on broadcasters. In its report titled “Promotional Effects and the Determination of Royalty Rates for Music,” the Phoenix Center does not deny that there could be promotional value for music on radio, though the authors of the report make a number of suggestions to question that seemingly common sense perspective. Rather, they contend that promotional value could be fairly quantified and incorporated in a free market discussion, if only Congress would “level the playing field among music distribution modalities” by imposing a new performance royalty right through legislation favored by record labels, such as the so-called Fair Play Fair Pay Act (H.R. 1733).

It is notable that the Phoenix Center does not discuss concerns about royalty rate-setting on digital platforms that were highlighted during previous years’ debates over the Internet Radio Fairness Act. Moreover, while the report states, “Legislative intervention based on the presence of promotional effect is unwarranted,” it appears to be arguing for Congress to take action and tip the scales toward the record labels. Now labels have access to a powerful promotional platform that is free to them and their desired customer, but legislation lauded in this report would create a new obligation – often referred to as a performance tax – on broadcasters to pay whatever price a government body may ultimately decide.

Dr. Jerry A. Johnson, President & CEO of NRB, this week reaffirmed NRB’s opposition to a new performance tax. “Radio stations providing Christian music do an immense service for local communities,” he said. “NRB will remain alert to any attempts to impose such a potentially crushing new financial burden upon them.”

NRB supports the Local Radio Freedom Act (H.Con.Res.17/S.Con.Res.4), which opposes “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.” In this Congress, it has the bipartisan support of 231 Representatives and 27 Senators.

By Aaron Mercer, Vice President of Government Relations

Published: November 18, 2016

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