Performance Tax Raised Again

An over-the-air performance tax was raised repeatedly in a House Judiciary Subcommittee hearing that was supposed to focus on webcasting royalties. 

The featured bill of the hearing was the Internet Radio Fairness Act (H.R.6480), sponsored by Rep. Jason Chaffetz (R-UT). This legislation would put all non-interactive digital audio services on an even plane by applying across the board the royalty setting rules of Section 801(b) of the Copyright Act. This standard has led to better treatment of music streamers than the current so-called “willing buyer, willing seller” standard. Music streaming giant Pandora has joined forces with a number of other organizations, including NRB member Salem Communications, in supporting the bill.

However, from the very beginning of the hearing, a terrestrial radio performance royalty was highlighted over and over again. Subcommittee Ranking Member Mel Watt (D-NC) claimed Rep. Chaffetz’s bill "at best nibbles around the edges of the challenge" since it does not include over-the-air radio.  Rep. John Conyers (D-MI), the Judiciary Committee’s top Democrat, also highlighted terrestrial radio and noted that the legislation before them "may well be the catalyst to formulating an AM/FM performance right.”

Responding to draft legislation by Rep. Jerrold Nadler (D-NY) that would institute a de facto performance tax on broadcasters by inflating the fees for their online streaming, Dr. Frank Wright, President & CEO of NRB, declared that such an approach would be a “crushing blow to many Christian radio stations” and is “fundamentally flawed as it rests on the faulty premise that all the value in radio airplay of music flows to broadcasters – an assumption refuted by reason and experience.” NRB will be carefully monitoring these royalties debates in the new Congress.

    • Find the full hearing here, along with press coverage.
    • See NRB’s response to Rep. Nadler’s draft performance tax bill.

By Aaron Mercer, Vice President Government Relations

Published: November 30, 2012