Wednesday, April 21, 2021
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Lame Ducks Shouldn’t Give Flight to New Legislation

On the Performance Rights Act

As Americans, we are fortunate to have a representative government. We take pride
in the fact that we get to choose the individuals who represent us in Washington DC.
These representatives vote on issues that affect us and our country in so many ways. And
sometimes when we choose to vote some of these individuals out of office, they still have
the opportunity to pass legislation post-election before a new Congress is sworn in.

Every other year the entire House of Representatives and one-third of the Senate are
elected. Congress is supposed to finish its business before this biennial election so that
those who have either retired or have been voted out of office aren't making decisions
counter to the wishes of the electorate. But since Congress didn't meet its Constitutional
responsibility of passing a budget for FY 2011 and there are numerous other issues to be
dealt with, they have to meet in a 1ame duck session.

This situation raises an important question: What legislation should be voted on by a
lame duck Congress? Funding the federal government is important and is obviously
a priority. And since we continue to experience anemic economic growth and high
unemployment numbers, it's imperative to hold off a hike in tax rates. But other
unrelated measures that could be tacked onto these measures should be off the table,
especially when those bills are being voted on by many members who have been voted
out of office and are thus not answerable to the electorate.

There are many bills in each Congress that pass through respective House and Senate
committees but do not have the support to pass each full chamber. Yet often these bills
are attached to bigger legislation, such as omnibus bills, as a way to sneak them in the back door. In a lame duck session, this shouldn't be allowed to happen.

For example, one such bill that doesn't have enough support to pass on its own but could
be attached to a must-pass bill is the Performance Rights Act (H.R. 848, S. 379). The
PRA would require radio stations to pay record companies a royalty for performers in
addition to the royalties stations already pay for songwriters.

First and foremost, the PRA represents an additional direct fee, or tax, imposed on radio
stations. And the financial hit would be significant. According to the legislation, radio
stations with annual revenues less than $1.25 million would be required to pay a flat
performance royalty fee to the music industry, ranging from hundreds of dollars to as
much as $5,000 per year. And stations with revenue above that threshold would pay
a royalty fee determined by the Copyright Royalty Board-thus for those stations an
indeterminate amount that makes for an uncertain future financial impact.

Beyond the financial impact is the secondary effect on communities if some of these
stations close down. This is a distinct possibility, especially among smaller broadcasters.

Radio stations are feeling the pinch as much as other businesses, so decisions about
staffing, programming and even shutting down operations would all be on the table.
Those are not rosy scenarios to ponder when national unemployment hovers around 10

For our representatives in Washington, DC, the message should be crystal clear: all
efforts should be made to right the economy and set us on a path for job growth. Please
focus only on what absolutely needs to be done and then adjourn. Any legislation that
couldn't gain enough support to pass on its own during the regular session should expire
along with the 111th Congress.

ABC as a Bellwether of McDonnell’s Gubernatorial Style

I'd like to point out that articles concerning the privatization efforts underway in the Commonwealth, whether mentioned in the Post or in the RT-D, all strike a similar chord of regurgitating facts or just reporting gradual moves as this issue (undeservedly) becomes McDonnell's first keynote.  He is looking for solutions to transportation and, whether or not this privatization passes, we know that this will be strike one.  $100m, $250m or $500m, including the figure of initial sale of ABC permits, will not absolve Virginia of its transportation woes.  A strike is a decent and worthy call here.

An article in the Examiner took a slightly different tone when it mentioned that the Governor had "handpicked the special panel of committee members" charged with passing the proposal.

The initial interpretation is that this is just another factoid out of many.  The reality is that it's an incredibly significant piece of the puzzle as to how McDonnell's political brain ticks.

This article hits a good note and paints a unique picture in the first handful of lines: that Governor McDonnell is taking a risk and that he's a kind of lone horseman on this policy venture [see "since Governor McDonnell handpicked the special panel of committee members"].  That's not to paint him as some sort of maverick or hero.  He has certainty in his immediate circle of advisers and pushers but lacks it in the General Assembly, where even fellow Republicans are casting doubts that even the eradication of some of the significant taxes hasn't been able to dry up.  The ultimate fallacy, to me, whether he wins or loses (but especially if he loses), is that he put all the chips on the table and didn't take a different approach to ease into privatization in an assured but cautious manner.  This says a lot about the Governor, particularly that he is a bit on the self-assured side, which can read reckless [see April's "Confederate Appreciation Month" as a minor example...or his inability to control all parts of his administration, like Cuccinelli, who is not doing McDonnell's bidding but is pursuing his course through stubborn, desperate self-interest].

Perhaps I have made minor points but the matter is that the Governor isn't hedging bets on other massive rearrangements of  how we run things in Virginia with the looming woes of transportation funding waving in his face.  He's making much ado about something that his supposed friends are stuttering on.

Stop the Performance Tax from Destroying Radio Stations Today!

Robert J. Smith, III
Richmond Chair
Metro Richmond Area Young Democrats

For over 80 years, two greatly beneficial industries have held a symbiotic business relationship: terrestrial radio stations and the recording industry.  As the recording industry moves to promote its artists, it is greatly aided by the exposure that these artists are given by radio stations that reach out into local communities.  Without this exposure, the recording industry would be constrained to other forms of advertising that have not always existed over the course of this relationship.  Indeed, the recording industry earns upwards of $2.4 billion a year that can be attributed to the efforts of radio stations.

The relationship was symbiotic until recently.  Legislation is currently in Congress, pending an imminent vote, that would shift the burden of cost for exposing artists to the radio stations themselves.  Terrestrial radio stations, a business of their own that run off of advertising costs, have provided a service, a form of free advertising, to the recording industry for years.

The legislation, titled the Performance Rights Act, would require terrestrial radio stations to pay performance royalty fees, based on a sliding scale determined by annual revenues, for the musicians who perform the songs they play over the air. Advocates of the bill say other formats-satellite radio, music downloads-already are required to pay these fees, and radio stations should be treated no differently. But this distinction misses a crucial point.

Radio airplay is different from those other platforms because of its enormous marketing value to artists. Without terrestrial radio airplay, albums don't sell, songs aren't downloaded, concerts are empty, and merchandise isn't sold.

Broader economic considerations should be weighed too. The PRA would create onerous new costs for radio stations, especially smaller, rural stations. There are many such stations that provide critical services - news, weather alerts, public service announcements - in the rural areas of our state.

Many of these stations are not affiliated with national networks, and thus do not have the cash reserves necessary to just ride out the storm.  They are surviving month to month and quarter to quarter in highly competitive markets in large part due to their intense connection with the communities they serve.   Their survival is essential, especially in an era of consolidation in our economy.

In short, the money generated from the performance tax would flow out of your community and into the pockets of the major record labels - and three out of the four are foreign-owned. The record labels would like for you to think this is all about compensating the artists, but in truth the record labels would get at least 50 percent of the proceeds from a tax on local radio.

There are currently two bills pending in Congress that would levy a performance tax on local radio - H.R.848, sponsored by Rep. John Conyers (MI-14) and S.379, sponsored by Sen. Patrick Leahy (VT). Your members of Congress need to hear that you strongly oppose these bills.

Additionally, anti-performance tax resolutions have been introduced in the House and Senate in support of local radio. In the Senate, Sens. Blanche Lincoln (AR) and John Barrasso (WY) introduced S. Con. Res. 14, and in the House, Reps. Gene Green (TX-29) and Mike Conaway (TX-11) introduced H. Con. Res. 49. Both are known as the Local Radio Freedom Act. Many members of Congress already support local radio and resolutions against the performance tax.

In light of the immediate nature of this legislation, it is important that we contact our representatives on all sides of the aisle to make sure they understand the implications that the Performance Tax hold in store for our economy and our communities.   The 106,000 employees that work for terrestrial radio stations count on our action to be spared the sacrifice of their jobs in the name of more profits for the recording industry.  Local businesses that rely on the reliably low costs of advertising on the radio airwaves will also lose out on opportunities to bolster their efforts toward success.  I encourage everyone to act now and contact both Senator Warner and Senator Webb, as well as all of our Congressmen, about the importance of fighting against the Performance Rights Act.

- Blue Virginia Sponsor -


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