WASHINGTON - Radio stations call it a performance tax. The music industry dubs it a royalty fee. But both refer to the same initiative that has been gaining momentum in Congress - and making broadcasters nervous.
The Performance Rights Act, pending in the House and the Senate, would require AM and FM stations to pay fees to performers and record labels, correcting what supporters regard as a copyright loophole.
For more than 80 years, commercial radio stations have aired songs without paying royalties to musicians.
Sound recordings were exempted from "performance rights" fees even after they became copyrightable in 1972; and the 1995 Digital Performance Right in Sound Recordings Act applied to only new technologies - cable, satellite, and Internet radio.
The proposed legislation would subject most radio stations to performance fees, to be split evenly between performers and copyright owners. Radio stations would pay an annual flat-rate fee according to yearly revenues, with the smallest paying $500, medium-size stations up to $5,000, and the largest more.
But opponents - including the National Association of Broadcasters, representing 6,500 radio stations - argue that airplay gives "promotional value" to artists because radio reaches 235 million weekly listeners, providing free advertising that helps with $1.5 billion to $2.4 billion in music sales annually.
Broadcasters' opposition to the bill comes as stations, collectively accustomed to earning billions of dollars each year, are losing ad revenue.
Dennis Wharton, NAB executive vice president of media relations, called the Performance Rights Act "the biggest threat to radio in 50 years" and could prompt local stations to lay off workers, decrease charitable donations, convert to all-talk formats, or go dark, he said. So the NAB has launched an extensive opposition campaign suggesting that musicians owe their careers partly to radio and asserting that performance fees would be paid to major record labels - including EMI, Sony and Universal - based outside the country.
But musicians and record labels say they too are hurting and portray their quest for compensation as an issue of fairness, citing instances of musicians who must perform into their 70s to continue earning revenue, and say most of the royalty fees generated by the act would be paid to musicians, who increasingly own their own labels.
"All we're seeking is a fundamentally fair radio performance right for the artists and musicians who've created the music we enjoy listening to on the radio," said Martin Machowsky, spokesman for the musicFIRST Coalition.
Since the act was introduced in 2007, and reintroduced in February, performers who have testified in support include Sheryl Crow, Nancy Sinatra, will.i.am, Herbie Hancock, Billy Corgan, and Dionne Warwick.
The Performance Rights Act is getting more playtime than in previous congressional sessions. Senate Judiciary Chairman Patrick Leahy (D., Vt.) recently said the act would be a top priority this summer; in May the House Judiciary Committee, headed by sponsor Rep. John Conyers (D., Mich.), approved the legislation after amending it to protect smaller and noncommercial broadcasters by creating a sliding-scale fee.