Nadler Introduces Radio Performance Tax Bill

Rep. Jerry Nadler (D. NY) has restarted the performance tax debate by introducing the “Interim Fairness in Radio Starting Today Act of 2012,” (Interim FIRST Act of 2012.)  The bill increases performance fees paid by radio stations that simulcast a live Internet radio feed.  In effect, the bill adds a new performance fee, based on the off-air broadcast, to the fee paid by the station for its internet streaming. The legislation views this as an interim step.  Its ultimate objective is to have a “technology neutral” payment standard.

The legislation is still a “discussion draft,” but will be introduced by Mr. Nadler. The House Judiciary Committee will schedule hearings on music licensing for sometime in the fall.  Mr. Nadler’s bill will be a key part of the discussion.  Legislation will not go forward this year, but may next year.

NYSBA strongly opposes this bill.  It is based on several fundamental policy errors.  First, it does not consider the value provided by free local radio stations to the recording industry.  The airtime provided to songs and recordings amounts to billions of dollars in PR for the record labels.  Second local stations cannot afford to pay the tax, and revenues will leave local NY markets for the pockets of the big record labels.  Radio contributes, both directly and indirectly, $32.9 billion and 64 thousand jobs toNew York’s economy.  Third, the goal of placing local stations on equal footing with Internet services ignores the public interest value of local stations.  Unlike streaming services, local radio provides coverage of emergencies such as the floods caused by Hurricane Irene.  Local stations are responsible for broadcasting Emergency Alert System (EAS) messages, at the federal state and county level.  Fourth, the bill places stations at a disadvantage when compared to streaming services.  It would require local stations to pay fees for their streaming services and would impose an additional fee for their off-air broadcasts.  Finally, in today’s economy many local stations simply cannot afford to pay higher fees to out-of-state record labels.

This legislation harms local communities throughoutNew York. We understand the big record labels have had a difficult time adjusting their business model in the digital age.  Nonetheless, the solution to their business problems should not be to increase fees and harm local radio stations that serveNew Yorkcommunities in the public interest.

Click here to see a copy of the legislation.

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