Congress is considering the Performance Rights Act which the music industry is pushing in order to force radio broadcasters and Internet service providers to replace funds which the music industry has lost due to its own lack of foresight. Consider the facts:

*Bing Crosby funded the development of the reel-to-reel tape recorder because he realized that repeated radio airplay of songs help boost music sales.

*During the Payola Scandals of the late 1950s record labels (illegally) paid money to DJ’s to play specific Rock ‘N Roll songs because on-air exposure and DJ endorsement influenced record sales to the teenagers who were listening to radio.

*Artists benefit financially in concert ticket and merchandise sales from repeated radio exposure of their music and the implied endorsement of the radio stations which play their music.

*Commercial radio stations already pay a hefty percentage of their gross annual revenues to music publishers and song writers through BMI, ASCAP and SESAC.

*Historically, record label contracts with new artists have been coercive and detrimental to the artists long term financial interests. (As reported in High-End Audio Industry News in June, 2002: “ Sony, long known for aggressive contract tactics with musicians and releasing proprietary music formats, have settled with popular band Dixie Chicks due to allegedly cheating them out of millions of dollars. While the details of the settlement have not been released, with over 20 million album sales and payment of only $4 million, (Dixie Chicks) filed a lawsuit due to Sony's "systematic thievery"’. It’s only now that the labels are suffering from he financial effects of a failed business strategy that they are desperately trying to convince artists, the public and Congress that radio should be paying for the right to air what are in essence free commercials for an artist’s product and career.

*Radio stations do not currently charge record labels nor artists for providing exposure and implied endorsement to audiences which the stations have spent millions of dollars to cultivate and grow.

David Honig, Executive Director of the Minority Media and Telecommunications Council noted in a letter to The Honorable Nancy Pelosi dated May 14th regarding H.R. 848 that “there is no corresponding examination by the House Energy and Commerce Committee of whether these stations should be compensated for the value of airplay and promotion they provide…”

Record label representatives have badgered radio stations since the late 1950s for increased exposure of their songs in the belief that increased airplay equates to increase music sales. In other words, a song played on a popular radio station serves as an effective advertisement not only for the particular song but also for the artist who performs it.

Should Congress pass the Performance Rights Act, it would seem reasonable that radio stations which have for decades provided these free advertisements as part of a symbiotic win/win arrangement with the music industry should be allowed to charge labels their :60 unit rate multiplied by each minute of a song’s length and for each time that the song is played. Consequently, if a song which is 3 minutes long were played 10 times between the hours of 6AM and 7PM, Monday-Friday on a station which normally charges $100/ minute for an advertisement, the station would charge the record label $ 3,000.00. (eg. 3 minutes @ $100/min.= $ 300 x 10 spins= $ 3,000.00)

Additionally, with the advent of technologies such as SoundScan which geographically tracks unit sales, BDS which tracks a song’s “spins” by individual radio station, and Arbitron ratings which provide information about a station’s audience share, it should be relatively easy to create a formula which would allow radio stations to participate in revenues generated by music sales in their zip codes of dominant influence. Consequently, the radio station would be entitled to a share of a song’s revenue from sales in its market along with a fee for the advertising it provided.

This seems to be a reasonable proposal considering the impact that the Performance Rights Act will have on all radio broadcasters should it be passed by Congress.