WITHERS FEELS SENATE PANEL'S HEAT ON ROYALTY, PERFORMANCE FEES Jeffrey Yorke – Radio and Records The discussion was "The Future of Radio," and, by all accounts, it's a dandy look down the road. And in the words of Carol Pierson, president/CEO of the National Federation of Community Broadcasters, "The overwhelming demand for terrestrial noncommercial radio stations coupled with the explosion of Internet-based webcasts and podcasts demonstrates that radio as a communications platform and art form is thriving."
It was a positive note for Pierson to share with the Senate Commerce Committee, looking at but just skimming the top of consolidation, media-ownership rules, royalty and performance fees and the Internet. NAB Radio Board chairman Russ Withers, owner of Withers Broadcasting Companies, testified that "radio's future is very bright, and I will offer perspective today from over 50 years working in radio on a variety of issues, among them low-power FM, media ownership and copyright fees."
But Withers was on a mission, and it wasn't to show the sunny side of the street in Radioland. He had issues. "I want to address the issue of performance fees and the attempts by the recording industry to impose what broadcasters consider to be a 'performance tax' on local radio." Withers went on with the well-worn story about how "local radio and the recording industry have always enjoyed a mutually beneficial relationship that can be distilled down to one concept: free music for free promotion. Local radio offers the recording industry a listening audience of 232 million listeners a week to promote and expose music that drives consumers to go buy music, attend concerts and purchase artist merchandise."
He added, "Radio broadcasters will fight this tax to preserve a local radio system that remains free, essential and available to all consumers."
After all, that was what Withers was sent to Capitol Hill to say.
John Sununu was listening, and any time a good Republican -- this one the senator from New Hampshire -- hears the word "tax" he becomes alarmed, even a little caustic. The senator wanted to know why Withers used the word "tax" when it had previously been called a "fee" by everyone except the NAB. (Insiders there point to NAB president/CEO David Rehr as the big proponent of using the word "tax.") Withers, after a moment of trouble, acknowledged that he disagreed with the phrase "performance tax" and preferred to call it a "performance fee." Sununu also pointed out that the phrase appeared in his written testimony, much to Withers' chagrin.
Withers also took some heat from the senator that Sirius and XM satellite radio operators were paying performance fees but that broadcasters were not. Sununu acknowledged that Sirius CEO Mel Karmazin had been before the same committee earlier this year and had complained that satcasters pay the fees, so why shouldn't broadcasters? Said Sununu to Withers, "You take consolation that everyone is complaining about them, then?"
"We objected to paying them," Withers responded. "But since we are where we are, because it is a new and different business from our business model," it was OK that satcasters paid the fees and broadcasters did not, he said.
Earlier on, while giving prepared testimony, the veteran broadcaster said, "The NAB supports legislation to vacate the Copyright Royalty Board decision and to establish new rates for Internet streaming of music. The CRB decision earlier this year causes serious harm in two ways. First, the cost for radio stations to stream music will drastically increase. Two, the new CRB rates are a barrier to entry for many stations that want to be part of the Internet revolution. We support a new and fair rate structure that encourages Internet streaming." He said broadcasters had tried to work with the recording industry but accused its representatives of "stonewalling." He added, "We all face a very uncertain future for what was becoming a growing and exciting platform for music."
Missouri Democrat Claire McCaskill opened her questioning with a love fest for Withers' "melodic radio voice" and noted that she was a fairly regular listener to one of his stations in Cape Girardeau, Mo., but that she mostly listens to the station not via radio but by computer. She questioned Withers' hesitation to pay the rate ordered by the Library of Congress' Copyright Royalty Board earlier this year, and he told her that the rate decided by the board was "probably 15 times greater" than even the RIAA had expected and too steep for broadcasters to afford. |