Performance Royalty Could Devastate Radio Station's Bottom Line

Implications: Bills to provide a performance royalty on the radio industry were introduced in both the House and Senate; if passed the measure would mean millions of dollars in fees paid by the radio industry.

Analysis: The Recording Industry of America and numerous artists have been lobbying for a performance royalty to be paid to artists by radio stations.  They may get their wish thanks to bills introduced on the House and Senate floors to establish a performance royalty.

If passed and enacted in to law, this move could mean millions of dollars in lost revenues for the radio industry.  Even little non-commercial stations would have to pay $1,000 a year, and stations with annual revenue under $1.25 million would have to be $5,000 a year.  For stations with larger revenues, the percentage is much higher.

Radio stations have paid royalty fees for decades to organizations like ASCAP. BMI and SESAC to play their music.  This money goes to the composers, and not the artists.  With digital downloading causing havoc to the recording industry business model, the RIAA is trying to capture more money for its industry.  By going after radio, they are targeting the one medium that promotes their industry more than any other through the playing of music.

This is going to be a bloody battle.  The National Association of Broadcasters will strongly oppose this legislation.  With ad revenues flat since 2000, the radio industry could nil afford to have millions sucked out of their operations to pay this tax.

It's too bad the RIAA and NAB failed to try to reach a compromise over this issue.  This is terrible news for the radio industry, and its really not good for the recording industry in the sense that it creates a further void between two interdependent industries.  What a mess.