House bill could kill music, radio stations with new tax

Jun 17 2009 - 3:01pm | Brett Thorne

It turns out it might not be the video that killed the radio star.

HR 848, known as the Performance Tax, could deal a huge blow to the already struggling radio industry. The bill would essentially tax radio stations for playing music in an effort to compensate artists for their performance on recordings.

Dan Schumacher, general manager of KTSW, said the bill has met with much opposition from organizations like the National Association of Broadcasters, of which he is a member.

“The difference between the performance tax and what we were already paying, originally, was that it only paid the songwriter,” Schumacher said. “Now it will pay the performers. So if you played fiddle on Merle Haggard’s third album, the record companies will somehow figure out a way to give you a percentage of a cent.”

The bill, which was introduced by Rep. John Conyers (D-Mich.) on Feb. 4, was ordered to be amended on May 13.

Rep. Sheila Jackson Lee (D-Texas) is the only Texas representative co-sponsoring the bill. According to Jackson Lee’s official Web site, “Only Iran, China and North Korea join the United States of America in preventing artists from being compensated.”

According to Jackson Lee’s Web site, the bill aims to “help the people whose music makes us laugh, dance, sometimes sing and shout for joy because of the praise they provide us.” Some disagree with this assessment. Schumacher said record labels stand to collect as much as half of the performance fee so he questions how much benefit artists will receive.

“If this was for the artists, wouldn’t they get a bigger cut of the fee,” Schumacher said. “(The record labels) have done such a poor job working with new technologies so I think they’re looking for a new way to create another revenue stream without having to actually think up a new marketing plan to sell music.”

The bill would charge smaller stations a sliding scale fee between $500 and $2500 which would grant the station unlimited access to music.

Schumacher said he estimated KTSW we be charged somewhere around $1000.

“It’s just another check we would have to write,” Schumacher said. “It would be another drain on our budget. I’m certainly not going to cut back on my staff but that’s $1000 we won’t be able to spend on new headphones, software or what have you.”

The bill will most likely discourage upstart radio stations, but large commercial broadcasters will be hit the hardest. Schumacher estimated the fee would run in the 10’s of thousands for large stations like 101X in Austin.

“They will pay much more,” Schumacher said. “Commercial stations will get hit hard. Some stations might get rid of music or cut back. Some are saying ‘We might just go talk.’”

Josh Dent, music director of KTSW, said the radio industry already serves labels by exposing the public to new music.

“We play new music from labels everyday in order to get artists’ music heard,” said Dent, English junior. “It’s not our fault if people are just too lazy to go out and buy an album and instead just download, rip or burn everything. Radio stations should not have to pay for that.”

Dent said with listeners flocking to the Internet to get their music, the timing of the bill could not be worse.

“To me it is kicking an industry while it’s down,” Dent said. “I don’t see it having any type of positive effect whatsoever.”

Schumacher said he and others agree about the poor timing of the bill.

“We’re at a time where revenues have dropped,” Schumacher said. “There are a lot of executives from commercial radio stations who are saying this is a terrible time to add all these fees. Will this be the thing that destroys commercial radio? I don’t think so but it won’t help commercial radio that’s for sure.”

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