Recording Industry Keen For Radio Royalties

WASHINGTON (CelebrityAccess MediaWire) — Terrestrial radio may be the next group to find itself in the recording industry's sights as a part of their struggles to cope with declining revenues from music sales.

BusinessWeek.com is reporting that music industry lobbyists are hard at work on Capitol Hill, pressing the flesh on behalf of their clients to convince Congress to enable them to exact royalties from the traditionally royalty-free (royalties are usually only paid to composers/songwriters) commercial radio business.

For most of its history, commercial radio has had a symbiotic relationship with the recording industry. While the songwriter/composer would receive royalty payments, the only advantage to the record label for letting the radio stations play their music for free was that it was essentially free advertising. There was no other real way for consumers to be regularly exposed to the recording industry's product. However, the proliferation in recent years of alternate outlets for music consumers have served to dilute the value of their role, at least in the eyes of the recording industry.

This has led a growing number of artists and recording industry groups to join in the musicFIRST coalition to induce congress to reappraise the existing copyright laws, especially the Digital Millennium Copyright Act of 1998. The recording industry is asserting that if satellite and web broadcasters have to pay royalties, that terrestrial radio should not warrant an exception.

They aren't going into this fray unarmed. A frequently cited study by economist Stan Liebowitz entitled "Don’t Play it Again Sam: Radio Play, Record Sales, and Property Rights" argues that terrestrial radio has become a competitor instead of a partner to the recording industry. Liebowitz's study suggests that music played on the radio actually has a negative impact on record sales, perhaps by as much as 20%. Liebowitz however, notes that his study may be inadequate to address the full range of the topic, stating in his conclusions that "On a methodological note, the apparent divergence between the impact of radio play on the sales of individual records versus its impact on sales for the entire industry indicates an important danger in trying to estimate the impact on an entire market by examining the impact on individual units, such as records."

They are going up against some stiff opposition however as the terrestrial radio lobby is a part of one of the most powerful and entrenched special interests in Washington. Any change that results from this will likely be long in coming and only the result of an arduous and costly battle. The National Association of Broadcasters, one of the primary trade associations lobbying for the broadcast industry spent $42,920,000 dollars lobbying Congress between 1998 – 2004 according to the Center for Public Integrity.

"A performance tax on radio makes no sense," Andy Levin, chief legal officer at Clear Channel Communications (CCU) told BusinessWeek.com. "Congress has recognized for more than 70 years that the record labels receive a substantial benefit from the airing of their music on free radio. They are basically receiving free advertising. This idea is just plain backwards. They should be paying us to play their music. Unfortunately, that's against the law." – CelebrityAccess Staff Writers

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