Commentary: Don't tread on radio for record labels' problems

By Gordon H. Smith
Monday, April 26, 2010

It's the Washington way: Get legislation introduced that benefits a special interest, identify a "face" for your industry, mount a pricey lobbying campaign, and hope the bill passes before the American people notice. The Performance Rights Act, aggressively supported by the Recording Industry Association of America (RIAA), is one example. If passed, local radio stations such as D.C. mainstays WHUR-FM and WKYS-FM -- and thousands of other stations across America -- would be required to pay additional fees for every song broadcast.

Supporters tell a woeful tale of a once-famed musician struggling to make ends meet, clinging to the hope of legislation that would reverse decades of injustice and secure a financially sound future for recording artists across America. But in this case, local radio stations -- the musicians' greatest and longest-serving promotional partner -- would be responsible for signing checks worth hundreds of millions of dollars, instead of the record label executives who have systematically abused artists for decades. In fact, 50 percent of the proceeds from this new fee on radio stations would be funneled directly into the coffers of the record labels.

With 50 percent in the labels' pocket, the remaining money would be divvied up by SoundExchange, an organization launched by the RIAA to collect and dispense royalty payments to artists. The disbursement would be split 45 percent for the featured artist and 5 percent for the background musicians -- if SoundExchange can locate them. But given media reports that SoundExchange had trouble finding the Mormon Tabernacle Choir, the location loophole seems to be a rather big "if."

It's unfortunate that the Internet has destroyed the business model of the record labels. No longer are music fans buying an entire album of songs to get the one track they enjoy. Instead, for a mere 99 cents or $1.29, they can download a single song through iTunes. Record label revenues have been cut in half over the past decade as a result. But that is not the fault of radio, which continues to build and nurture the careers of countless artists through free radio airplay.

The record label claim that this legislation is about "fairness to artists" is dubious. D.C. native Herb Feemster of Peaches & Herb" fame -- as well as artists ranging from Benny Goodman to Pink Floyd to Cher -- had to file lawsuits against their record labels to recoup unpaid royalties.

Contrast the record label exploitation of artists with that of radio stations that advance the careers of musicians with free airplay and concert promotions. With a growing audience of 239 million weekly listeners, free and local radio remains an unparalleled promotional platform for music, generating untold billions in album and concert sales and merchandising opportunities.

No one disputes the need for artists to be paid for their work. But like every other business in America, those payments should come from their employer, the record label, not from the local radio stations that have propelled their careers to stardom.

If this bill becomes law, hometown radio stations across America would be forced to cut jobs and reduce the public service and charitable work that is the hallmark of local broadcasting. Many stations will switch from music to all-talk stations to avoid paying onerous new fees.

And that would hurt artists much more than it would help them.

Gordon Smith is president and chief executive of the National Association of Broadcasters. He previously served as a two-term senator from Oregon.

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