Broadcasters, Musicians Turn Up Volume in Royalty Feud

Posted February 18, 2010 at 3:03pm

The rhetorical war over performance royalty legislation shot up a few decibels on Thursday with groups representing recording artists slamming new radio and television advertising spots by the National Association of Broadcasters. The NAB ads claim the royalty proposal would amount to a tax on radio stations and “a new bailout” that would largely benefit foreign companies.

A coalition of recording artists has complained that the ads are not only misleading but that the broadcasters have an unfair advantage because they can more easily spread their message through free access to television and radio airwaves.

“We don’t control the airwaves. We don’t have free access to spectrum,” wrote leaders of several groups representing musicians and recording companies in a Feb. 18 letter to Congress responding to the NAB ads. The letter writers said broadcasters would win a medal for “audacious nonsense,” and said they were confident lawmakers would see “through the fog of misinformation.”

Broadcasters, however, say the legislation, which would require radio stations to pay royalties to performers, would amount to extra costs for them and would be financially ruinous.

“It is a job-killing bill,” said Dennis Wharton, NAB’s executive vice president of media relations. He said the ads prepared by the trade association were made available to its members, which include 14,000 radio and 1,700 television stations. The stations have the option to run the ads when they have airtime available.

While Wharton said he has received anecdotal information about stations running the ad, he did not know how many have broadcast the spots.

He acknowledged that not having to pay to air the ads was an advantage.

“I wouldn’t deny that,” he said. But Wharton said the musicians have also received free promotion for their point of view during the past three televised Grammy awards.

“The supporters of the performance tax have lobbied on the live program for artists’ rights and passage of this bill,” he said.

Martin Machowsky, spokesman for musicFIRST, which lobbies for recording artists, responded that a mention in a speech given during the Grammys does not compare “to the unfettered and free access to the airwaves that the broadcasters have.”

Machowsky noted that in his statement at the most recent Grammys, Neil Portnow, the president of the Recording Academy, did not specifically mention the royalty legislation. Portnow did urge “supporting and compensating these gifted creators of the music we treasure.”

In the letter to Congress, the recording artists coalition responded to a number of the claims by the broadcasters, including that the royalties would largely benefit foreign recording labels such as Sony, based in Japan, Universal Music Group, a subsidiary of French-based Vivendi, and EMI, which has headquarters in London.

“The broadcasters also like to engage in xenophobic wedge rhetoric,” the letter states. “They try to make this about foreign-owned companies; it’s not. It is about American jobs and American creativity.” Among those who signed the letter were Portnow; Mitch Bainwol, chairman of the Recording Industry Association of America; Kim Roberts Hedgpeth, national executive director of the American Federation of Television and Radio Artists; and Jennifer Bendall, musicFIRST Coalition executive director.

At the urging of key lawmakers, the broadcasters and recording artists have met to hammer out their differences over the legislation, which has been approved by Senate and House Judiciary committees.

The talks, which Wharton characterized as discussions, have not yielded any agreement.

“We’re not negotiating,” Wharton said. But he added that “out of deference,” to Members of Congress, his group was “talking to the other side.”

Wharton said NAB plans to bring its members to Capitol Hill to lobby lawmakers in the first week of March.

Machowsky said his group had not yet decided on its next lobbying move.

“I would say that depends on what happens in the negotiations in the next couple of weeks,” he said.