THE BLOG
10/09/2009 09:01 pm ET Updated May 25, 2011

Radio Will Stop Playing Music

Stations are threatening to flip to talk, religion and sports. Or even worse, only play hit songs. Why?

The music industry wants radio to pay for playing music. Radio stations currently pay the songwriters and publishers of songs, but not the artists performing the work (which often is different from the songwriter). Of course radio should pay. Part of the reason why songs become popular is because of the performers. However, it may be too little too late. The recording industry should have been more forward thinking in 1939 when broadcasters convinced them radio play was 'promotional' and did not merit payments. (Ironically, MTV persuaded the record labels of the same thing for playing videos in the 1980s.) Additionally, the recording industry did not have strong enough lobbying power against the broadcasters in 1976 when the copyright law was amended.

Thankfully, the recording industry was smarter when it came to webcasters, satellite radio providers and cable companies. When those technologies emerged they fought for the performance right payment.

Of note, the United States is one of the only nations in the world, holding court with such liberated countries Iran, North Korea, and China, which does not pay performing artists for radio play. As a result, foreign stations do not have to pay American artists when music is played internationally. This costs American artists tens of millions of dollars annually. It is estimated that acts and record labels (who would receive 50% of the royalty) are being deprived of at least $400 million a year.

To obtain this payment, the Performance Rights Act, backed by the MusicFirst Coalition - a group of labels, artists, and managers--was introduced earlier this year. Thus far it passed out of the House Judiciary Committee over the summer, but has yet to clear the full House. The Senate Judiciary Committee announced this week it will take up the bill.

Under the Performance Rights Act, smaller stations and non-commercial stations would only play between $500 to $5,000 annually. For bigger larger stations, fees would be negotiated or be earmarked as a percentage of revenue. The National Association of Broadcasters (NAB) argues for some small stations, who are already stretched paying publishers and songwriters, even a nominal fee could be too much.

Interestingly, an NAB backed bill titled the "Local Radio Freedom Act" has been introduced as a counter to the Performance Rights Act and has the support of over 158 lawmakers.

The NAB claims because the record companies are in financial trouble, they want radio to pay to offset costs. The NAB also calls the Performance Rights Act a 'tax' - which it is not because it's not a government payment.

Terrestrial radio is actually in the same mess as the record companies. Thanks to the plummeting economy, radio has reportedly lost 60% of its advertisers, including belly up companies Comp USA, Good Guys, Tower Records, and Circuit City, as well as local automotive and financial institutions. Clear Channel let go of most of its part staff. Citadel is close to chapter 11. Cox is doing similar cutbacks.

Radio One has gone to the extreme by calling the act racists, claiming it targets smaller minority owned stations, which is ridiculous. A few stations have gone so far as to blacklist artists who speak on behalf of the Performance Rights Act in front of Congress.

Some claim the debate is simply Big Radio vs Big Content. Big Radio doesn't care as much about music as it does money. So, if broadcasters are forced to pay a performance fee, more and more stations in every market will flip to talk, news, sports, and religion (some already have). Or, insiders fear radio will opt to only play the hits they pay for, leaving a vacuum for emerging artists.

Should radio pay. Or course. It just may be too late. The coffers have dried up.

If radio is really 'promotional' for record labels, then maybe the labels should pay radio stations every time a song is played? Oh right, program directors asked for that once upon a time, and the labels coughed it up. It's called payola.