What Broadcasters say: "A Performance Right will put broadcasters out of business."

The truth: Creators of music have absolutely no interest in putting any broadcaster out of business. In fact, The Performance Rights Act, as amended in the House, includes significant accommodations for the vast majority of stations:

• Any station that makes less than $100,000 annually will pay only $500 annually for unlimited use of music. (Less than $42 per month.)
• Any station that makes less than $500,000 but more than $100,000 annually will pay only $2,500 (half of the amount in introduced bill) annually for unlimited use of music.
• Any station that makes less than $1,250,000 but more than $500,000 annually will pay only $5,000 (the amount in introduced bill) annually for unlimited use of music.
• Noncommercial and public stations such as NPR, nonprofit religious stations, and college radio stations will pay a nominal flat fee of only $1,000 per year for an unlimited use of music. (Less than $85 per month.)
• Commercial talk radio, Religious and Mixed Format stations would not pay for incidental uses of music at all, and formats that make more than incidental uses but do not play music all the time would only pay for the music they use.
• The broadcast of religious services would be completely exempt from any payment.

In addition, to assist broadcasters through the current economic condition, no payment will be required for three years after enactment of the legislation (one year for stations that make more than $5 million annually).

The law would recognize economic hardship by making significant accommodations for approximately 77% of all commercial music radio stations in the country. These accommodations would ensure that they would never pay more than a nominal amount per year for all the music they can use. But that compensation would make a significant difference in the income of thousands of working people.

Broadcasters the world over pay creators of music without going out of business. Here at home, broadcasters pay for deejays, equipment, utilities and salaries, just like any other business would. Why shouldn't radio pay for their most important profit-driver of all - the music they broadcast? If webcasters, satellite radio and cable radio can afford to pay musicians, artists and owners of recordings for the music they use, AM and FM broadcasters can certainly afford to pay as well. It is, after all, the primary reason that they have an audience that attracts billions in advertising.

With that said, the musicFIRST Coalition is open to further discussions. We recognize broadcasters have built a business model on not paying, so we want to work with them to find a resolution acceptable to all parties. All broadcasters have to do is sit down with us - something they have so far refused to do.

What Broadcasters say: "Given the state of the economy, this is "the worst time" to place a new financial burden on stations."

The truth: Broadcasters actively fought Performance Right legislation in the ‘50s, ‘60s, ‘70s, and ‘90s as well. It will never be "the right time" for them. No one is suffering more right now than individual working musicians. This is "the worst time" not to pay them for their work. And it's never the wrong time to do the right thing.

Furthermore, the current version of the performance Rights Act recognizes the current economic downturn: No royalties will be required for three years after enactment of the legislation (one year for stations that make more than $5 million in revenues annually).

What Broadcasters say: "Payments will go directly to the "big internationally-owned record labels."

The truth: Compensation is divided evenly between artists and owners, including minority-owned small local record labels, and artist-owners (not just "big record labels"). The guaranteed artist share would not be subject to any record company recoupment. The artists' share of royalties is paid direct to them and is never touched by their label. It's the law (read the statute governing the split for digital performance royalties, Title 17 Section 114(g)(2) here.) In those cases where artists own their own copyright, 100% of the performance royalties would be paid directly to them.

In fact, this is already happening with digital performance royalties. SoundExchange pays thousands of artists directly and just recently did a distribution of $23 million.

What Broadcasters say: "This legislation will only help rich artists get richer."

The truth: Under current law, satellite, cable, and Internet radio royalties are distributed through SoundExchange to thousands of artists. The money lesser-known artists receive - and would receive under The Performance Rights Act - can make a big difference in their lives, including helping individual recipients to pay for health care costs and other necessities. Thousands of musicians and vocalists will receive royalties reflecting their multiple contributions to different recordings played often on radio.

Also, a portion of the Performance Royalties received under the Act are designated for background musicians and vocalists through special funds maintained by the American Federation of Television and Radio Artists and the American Federation of Musicians.

What Broadcasters say: "This is a new "tax" on local radio."

The truth: It's actually the reverse of broadcasters' "tax" claim. Because all other types of radio in the U.S. and all broadcasters worldwide pay artists, musicians, and owners of recordings to broadcast their music, the radio stations' exemption from payment actually constitutes a giant subsidy. Broadcasters' opportunistic and hypocritical use of the word "tax" is evident from their successful lobby for retransmission consent (payment for the use of TV broadcasts by cable companies) - somehow they didn't view that as a tax.

There's nothing "new" about this. Music creators have been seeking a Performance Right for more than 70 years and broadcasters have been mislabeling it a "tax" for almost as long. In fact, in the 1920s, broadcasters briefly refused to pay songwriters, calling payment to them a "tax." Today, they have dropped that misnomer for songwriters and do (rightly) pay them. Now it's time for broadcasters to do the same for performers and recording owners.

What Broadcasters say: "Broadcasters should not be held responsible for the music industry's economic troubles."

The truth: Of course not. The Performance Rights Act has nothing to do with the state of the music industry. This legislation has been sought - and broadcasters have fought it - for more than half a century, through good times and bad. It has nothing to do with laying blame or scapegoating. It has to do with the fundamental concept of paying for the use of someone else's property.

What Broadcasters say: "Performers and recording owners already receive payment through promotion of their music. In fact, many artists have acknowledged radio's promotional value."

The truth: We do not contest that the broadcast of music can sometimes help to promote other economic uses - hopefully compensated - of music. But the fact that broadcasting may in certain circumstances be promotional places broadcasters in an excellent bargaining position to negotiate a fair price for the music they use, and they should come to the table.

Actually, the true free publicity and promotion occurs with broadcasters' use of performers' music without compensation to gain an audience and sell advertising time. Radio does not play music for the purpose of promoting the sale of music - radio plays music to attract listeners who, in turn, attract ad dollars.

Every other radio platform - including satellite, cable and Internet - pays even though they claim the same promotional benefit. A special interest exemption for over-the-air broadcasters amounts to government-sanctioned unfair competition. Moreover, songwriters benefit from any claimed promotional value as much as artists, musicians and owners of recordings, yet they are paid by AM and FM radio for their songs. What's the distinction?

More than half of the music broadcast today is oldies, which benefit much less from promotional value. Further, the market is very different from just a few years ago. Consumers no longer hear a song on the radio and go to the corner store to buy the album. We are increasingly moving toward a "listen-only" marketplace, where consumers merely hear performances of the music without making a purchase. Promotion has considerably less value today. For that reason, it is more important than ever that creators receive compensation for those performances.

In fact, instead of a promotional effect, radio can be shown to have a substitutional effect. Since people have the option of listening to music for free - whether at home, in the car, or at work - overall there is less money spent on music by consumers.

Promotion is everywhere in business, but that doesn't excuse users of a product from paying for that product. Movies promote the sale of books but no one would ever suggest that movie studios shouldn't have to pay authors. Radio promotes sports teams and talk show hosts by broadcasting their content. Broadcasters certainly cannot tell the NFL/NBA or talk personalities that such promotion means they should get their content for free. Only music is taken for free.

The creator should be the one who gets to decide whether any promotional benefit is worth giving away his or her work for free, not the broadcaster who is using it for its own benefit. Nothing in this legislation prevents a creator from giving away his or her product for free to a broadcaster if they choose to do so. The Performance Rights Act merely enables the parties to negotiate a fair price for use of music.

What Broadcasters say: "Record companies beg broadcasters to play their music. Just look at payola."

The truth: Payola is prohibited. Every major label has clear policies banning this practice. Those who violate the rules are punished. When the New York Attorney General looked at this matter several years ago, he described the circumstances as an "extraction" - in other words, radio stations were extracting payola from record companies. We've never said there isn't value to spins; we have said that that value should be incorporated into the rate setting process. That's what The Performance Rights Act does.

What Broadcasters say: "The legislation will affect broadcasters' ability to provide news, sports, public affairs and other programming."
The truth: The Performance Rights Act, as amended in the House, provides explicit language to ensure that this legislation cannot affect broadcasters' public interest obligations to serve the local community.

In fact, providing such services has never excused stations from paying for rent or electricity or DJs or any other cost of business. Why should it excuse them from paying for the very product upon which their business is based? The Performance Rights Act provides broadcasters with a significant discount on the one product they can't do without - and should be paying for.

What Broadcasters say: "The record labels have negotiated abusive deals with artists and that issue should be addressed before a radio performance royalty is established."

The truth: It's difficult not to be amazed at this obvious diversionary tactic by broadcasters. Should a restaurant refuse to pay for beef if its butcher has a contractual dispute with the farmer? Contractual issues are between artists and labels. Where those rare disputes arise, it has nothing to do with broadcasters.

Broadcasters also have significant internal fights, like all industries. (How many times has NABOB sued NAB?) The recording industry has internal issues too, but labels and artists stand together on The Performance Rights Act. This is a smoke screen being used by broadcasters to distract people from the real issue.

The fact is, artists have been asking broadcasters for this right for years and are now members of the musicFIRST coalition, a broad coalition of artists, musicians, managers, producers, and record labels (major and small independent) supporting The Performance Rights Act. Artists have no need for broadcasters' bogus concern for them as an excuse not to pay them.

What Broadcasters say: "This is merely a "blind money-grab" by big record labels to prop up their "dying business model."
The truth: Broadcasters are contradicting themselves. On one hand, they call this a new initiative by record labels, while on the other they say Congress has repeatedly considered the issue over the decades. In fact, a Performance Right has been sought by artists and recording owners, including record labels, for more than half a century. Whether the market is up or down, whether the recording and broadcast industries are growing or shrinking, granting a Performance Right has always been the right thing to do. And broadcasters have always made up reasons not to do it.

What Broadcasters say: "Terrestrial radio has "public interest" obligations that set them apart from other platforms."

The truth: By that reasoning, they shouldn't be paying songwriters either - but they do and always have, and should continue to do so. In exchange for what they do in the public interest, broadcasters have been granted extraordinarily valuable spectrum by the federal government for free. Their public interest obligations have nothing to do with paying for music. And, again, The Performance Rights Act, as amended in the House, provides explicit language to ensure that this legislation cannot affect broadcasters' public interest obligations to serve the local community.

What Broadcasters say: "The Performance Rights Act will cause high school and college radio stations to close down."

The truth: As noncommercial educational broadcast stations, high school and college radio stations fall within the Performance Rights Act exception allowing them to pay only $500 per year for all the music they can play ($1000 per year for noncommercial stations making $100,000 or more in revenues annually). The provisions of the Performance Rights Act, including educational institutions' accommodation, provide a fair and reasonable balance between radio's need for music and creators' need to be compensated for use of their property.

What Broadcasters say: "Terrestrial radio is different from other platforms because they deliver for "free" to the consumer."

The truth: Many Internet radio webcasts are also "free" to the consumer, but they pay artists, musicians and owners of recordings. In fact, many AM and FM radio stations also simulcast their programming over the Internet - in those instances, they DO pay performance royalties and the content is "free" to the consumer. What is the policy rationale for excusing payment to performers for the exact same content from the exact same business just because it is sent over the airwaves instead of over the Internet?

What Broadcasters say: "The legislation will affect small businesses, venues and establishments."

The truth: The Performance Rights Act covers only broadcast radio stations. The legislation has nothing to do with bars, restaurants, retail establishments, sports and other entertainment venues, shopping centers, or transportation facilities.

What Broadcasters say: "The broadcasting industry in the U.S. is different than in foreign countries, where stations are generally government-owned and subsidized."

The truth: Most radio stations in foreign territories are not subsidized by the government. In fact, over 70% of radio revenue in Canada and Holland - countries that most recently adopted the sound recording right - is derived from commercial broadcasters. These two most recent adopters of the sound recording rate are a good study for how private radio fares: they have experienced robust commercial revenue growth over the last five years, which was as high as 20.5%.

The international situation is very complex. There are some countries in which royalties are not even collected from broadcasters for their performance of US music because we don't have a performance right in this country. There are other countries in which royalties for US recordings are collected but distributed only to local (not U.S.) recording artists. In other countries the royalties are used for social and cultural purposes to benefit only local recording artists. But whatever the situation may be for the past, record labels are working with artists and the rest of the music community to enact the Performance Rights Act so that artists are paid their royalties directly by the foreign collecting society. Payments would not be passed through the label, and would not be subject to recoupment, but would be paid directly to the artists.

We need a performance right in the U.S. so that American artists and labels can be paid for radio performances of American music, the most popular music in the world. Over 30-50% of music played on the radio around the world is American music. Until the Performance Rights Act becomes law, Americans artists and businesses lose approximately $100 million in royalties owed to them from foreign radio stations every year.

What Broadcasters say: "The comparison to TV broadcasters' desire to be paid for retransmission of their content is inappropriate."

The truth: Through the Retransmission Consent Process, federal law allows broadcasters to negotiate a price for the retransmission of their signals by cable and satellite systems. When these cable and satellite systems use broadcasters' programming, broadcasters want to be paid for it. But when broadcasters use the music of artists and recording owners, they don't want to pay for it. That's pure hypocrisy. Broadcasters want to be paid when their programming is retransmitted into the broadcaster's local market by cable and satellite, even though carriage on those platforms promotes revenue increases and helps broadcasters sell more commercials at higher rates.

In fact, broadcasters themselves have acknowledged the simple and fundamental point of this right: that use of someone else's property requires the ability to negotiate for compensation. After all, broadcasters have argued forcefully that cable and satellite operators who retransmit a broadcaster's signal into that broadcaster's local market - and therefore "promote" the broadcaster by bringing the signal to new viewers in the market and thus produce more revenue for the broadcaster - must still pay them for use of their TV programming. Unfortunately, broadcasters have argued just as forcefully against payment when it's their radio stations using others' music. Of course, that's not complexity; it's just hypocrisy.

According to NAB:

"Before the retransmission consent system was created, cable would simply take broadcasters' product - our signals and programming - and use it to attract subscribers, without the station's consent."

In fact, this is exactly what broadcasters do: they use our music to attract an audience and, in turn, advertisers, from which they have created a multi-billion dollar industry. All without compensating the artists and recording owners who create the music - and broadcasters' business.

What Broadcasters say: "The current system represents a symbiotic relationship that has been enjoyed by both sides for more than 70 years."

The truth: It's not symbiotic if one side has absolutely no say in the matter. A symbiotic relationship supposes the mutual consent and benefit of both parties. The current law, in contrast, allows broadcasters to take - without consent - creators' music and use it to build on a multi-billion dollar broadcasting industry. Hardly a symbiotic relationship.

What Broadcasters say: "The legislation will harm minority-owned stations and affect the diversity of broadcasting."

The truth: The accommodations provided in the House-amended bill offer significant protections for small, noncommercial, and minority-owned stations. In addition, the legislation requires that, Copyright Royalty Judges must consider evidence relevant to small, noncommercial, minority, and religious broadcasters and religious and minority royalty recipients when determining a "price" for the music used by radio stations. Evidence of local non-music programming relevant to stations that are part of station groups in which the entire group is located in one local market must also be considered.