Originally published by The Hill on April 21, 2017.
If the music industry has its way, Congress will soon pass legislation that will charge consumers more for listening to music.
Major publishers of music have made record revenues from music royalties, but now they want Congress to legislate even larger profits. The largest publishers and record labels have created a front group called MusicFirst, which is organizing major lobbying efforts in Congress to generate artificially higher profits for the industry.
Currently, local radio stations receive free airplay in exchange for the free exposure they provide to artists. That exposure is highly valuable as it reaches hundreds of millions of people each week. One study suggested that the total value of such airplay totals nearly $2.5 billion annually.
Radio airplay is what determines the commercial success of artists, and it’s clear that record labels would even pay for its promotional value. But federal law prohibits doing so. The “free airplay for free advertising” set-up was created at the onset of the radio age to please both sides of the music equation, and to ensure that money would not corrupt or influence radio playlists.
Yet despite the fact that the music industry receives billions in free advertising from local radio stations every year, it’s asking Congress to impose a new royalty fee on local radio stations for playing popular music.
The specifics of the proposal are still being worked out, but it has already involved big hitters in the music industry. The group financed Grammys on the Hill and Advocacy Day earlier this month, and had about one hundred of the biggest celebrities in the entertainment industry knock on representatives’ office doors.
The leading music publishers and record labels dismiss the value of radio play for music success, yet airtime on local radio stations remains the largest factor in the success of popular music. “That’s where they get a lot of my music,” said country artist and 2017’s honoree at Grammys on the Hill Keith Urban. As a result, the record labels and publishers behind MusicFirst annually invest millions in promoting music for radio airplay.
MusicFirst, referring to the promotional value of radio airtime, notes in a statement, “In any other market-based arrangement they (local radio stations) would have to compensate the owner of that music at market rate.” But the reality is that in any other market-based arrangement, “big music” would also be paying for the promotion of their product as advertising.
In an open letter to Congress, MusicFirst said their proposal was based on “market-based principles [that] drive compensation for all artists and creators.” The problem is that the market would not set the “market rate” at all: The coalition is advocating for a government rate-setting agency to dictate prices on local radio stations.
Clearly, this effort is not one of seeking increased revenues for the music industry via the free market, but one of seeking a government-imposed fee at the expense of those who listen to popular music via local radio stations.
While the industry has sought several times in the past, through both legislation as well as regulatory action, to increase their profit margins, all of those efforts have failed. One such effort in the past was the Songwriter Equity Act, which did not go anywhere in Congress. The music industry has also unsuccessfully sought to get the Department of Justice to allow for artificially higher royalty rates off the backs of taxpayers.
Bailing out the music industry should not even be on Congress’ map. Voters elected their members of Congress to repeal and replace ObamaCare, reform the federal government, create jobs, and build a much stronger economy. Congress should heed the wishes of the voters that elected them and tell “big music” that the era of special interest bailouts is over.
