Main Point: Congress, RIAA should keep their greedy hands off radio's profits

Jul 1 2009 - 4:00pm | University Star Editorial Board

HR 848 levies a new tax on radio stations. The tax is supposedly to go to artists to compensate them for their performance on albums, according to an article in the June 17 issue of The University Star.

This might seem like a worthy cause at first glance. However, this is simply the recording industry trying to pilfer every last cent from where ever they can. According to Dan Schumacher, general manager of KTSW, record labels stand to collect as much as half of the performance fee.

For years the radio and recording industries have enjoyed a healthy symbiotic relationship. The recording industry provided artists and music for the radio stations to play, and in turn the stations promoted the artists. It does not make much sense for the recording industry, commonly represented on capital hill by the Recording Industry Association of America, to be leaching off radio stations now.

It is no secret both industries are doing poorly. Listeners are getting music off iTunes or turning to online radio stations such as Pandora (not to mention the millions of people who still download music illegally). This has hurt both radio and record companies.
But the tax is the equivalent of one drowning man grabbing onto another to stay afloat. It might seem like the thing to do in a moment of panic, but it does not provide any real solutions.

Schumacher said KTSW will probably pay about $1000 more because of the new tax. Larger radio stations, like 101X in Austin, might have to pay tens of thousands of dollars. It hardly seems fair that a student radio station with expensive needs must pay money to the recording industry, which benefits from KTSW’s existence in the first place. Successful artists make a healthy living by selling tickets to shows and licensing merchandise; they hardly need KTSW’s and other small radio stations’ money. Even though the recording industry is doing poorly as well, that is no excuse to be extorting money like this.

The best solution for both parties is not to find ways to nickel and dime one another, but to come up with new, creative ways to generate revenue with what they offer.

Both industries are scared, and this tax is a product of that fear. The recording industry’s business model is no longer generating revenue like it used to, but that does not mean there is no longer money to be made with music. Instead the recording industry should re-organize itself and get better in touch with what people are listening to.

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