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The Performance Rights Act

Puts Local Radio at Risk

Issue

Over the past several years Congress, has introduced a bill (Performance Rights Act) to impose a performance fee on local radio broadcasters. This would impose a devastating new fee on local stations simply for airing music on the radio. It could financially cripple local radio stations it would put jobs at risk, stifle new artists and harm the listening public who rely on local radio.

Background – By airing the music on the radio this provides free promotion to the labels and artists. In otherwords we believe in the system that was been working for more than 80 years. Record labels and performers have thrived from free radio airplay (said another way it is essentially free advertising). Radio provides the recording industry increased popularity, visibility and record sales. The promotion by local radio does not stop at playing music, it includes concert promotion, on-air band interviews and ticket and CD giveaways. The value of free radio promotion to record labels and performers is well recognized.

Radio touches 241 million listeners a week, a number that dwarfs the reach of Internet and satellite radio. In fact, 85 percent of listeners of all audio services identify radio as the place they first heard new music.

But now the record labels find themselves struggling because they have failed to adapt their business model to the digital age.While their business model suffers, they seek to recoup revenues on the backs of local radio stations that are, ironically, their greatest promotional tool.

Performance Rights Act legislation hurts the local radio stations that communities depend on for entertainment, local news and vital information during times of crisis. Broadcasters are engaged in a good faith effort to resolve this issue in the best interests of both radio and the music industry.

UBA along with other State broadcasters Associations (NASBA) and NAB have been working very hard on this issue. We have pointed out that because of the promotional value of free radio airplay, they should not pass The Performance Acts bill. So far it has worked. the makeup of the current Congress has also helped.

That said the issue is not over and done with. So we are working with NAB under Gordon Smith's direction on the following premise:

While NAB is opposed to the Performance Rights Act, in February 2010, at the request of congressional leaders, we began a constructive dialogue with musicFIRST – the organization representing artists, record labels and unions – in an attempt to resolve the longstanding performance tax issue and shape a positive outcome for the radio industry.

In a good faith effort to resolve this issue, NAB's Radio Board of Directors endorsed a solution in October 2010 after months of discussion and feedback from the radio industry. NAB presented musicFIRST with a legislative term sheet where music-playing terrestrial radio stations would pay a limited performance fee, which would be set at between 0.25 percent and 1 percent of a station's net revenue or less, depending on the size of a station and a provision related to the penetration of radio-activated mobile devices in the U.S. The term sheet also included provisions providing for lower streaming rates, resolution of union issues that make streaming difficult for stations and permanent removal of the Copyright Royalty Board from the rate setting process.

While the term sheet was not agreed to by the music industry, NAB is open to maintaining discussions, but will continue to fight any performance tax legislation on Capitol Hill.

Action Needed

Congress should oppose a congressionally mandated performance tax on free, local radio broadcasters that would jeopardize local jobs, prevent new artists from breaking into the recording business and harm the 241 million Americans who rely on local radio. Additionally, members should cosponsor H. Con. Res. 21 and S. Con. Res. 7, opposing any new performance tax, fee or royalty on local radio stations.

Lowest Unit Charge

In the 45-day period prior to a primary or caucus, or the 60-day period prior to a general or run-off election, Congress has limited what a radio or television station may charge a political candidate for airtime. Candidates are entitled to a lowest unit charge (LUC) - also referred to as lowest unit rate (LUR) - during these periods, which is the lowest advertising rate "of the station for the same class and amount of time for the same period." This provides a candidate the benefit of all discounts offered to a commercial advertiser for the same class and amount of time, without regard to the frequency of the candidate's advertising.

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