Please take a moment and read the following information concerning the so-called “Performance Tax” that is being considered in Congress that will have a major impact on small market radio companies such as ours.

What is a performance tax?

A performance tax is a fee that record labels want the government to impose on local radio stations simply for airing music free of charge for listeners.

In recent years, the record labels have seen sales of albums decline as more listeners opt for digital downloads. However, radio remains the number one promotional vehicle for music – it’s not responsible for the label’s resistance to the digital age, and it shouldn’t be on the hook to fix it. Radio already provides between $1.5 to $2.4 billion dollars annually in music sales for artists and record labels. By pushing a tax on local radio, record labels are biting the hand that feeds them.

Where does the money go?

In short, the money would flow out of your community and into the pockets of the record labels – the great majority of which are foreign-owned. The record labels would like for you to think this is all about compensating the artists, but in truth the record labels would get at least 50% of the proceeds from a tax on local radio.

How does this affect me?

If you’re one of the 235 million people who listen to radio each week, a tax could reduce the variety of music radio stations play, and all but eliminate the possibility of new artists breaking onto the scene. The tax could particularly affect smaller, minority-owned stations, some of which may have to switch to a talk-only format or shut down entirely.

It also affects your community.

Radio stations are major contributors to public service – generating $6 billion in public service annually and providing vital news and community information and free airtime to help local charities. If a tax were imposed, stations’ critical public and community service efforts could be reduced.

And worst of all, if you’re one of the 106,000 Americans employed by local radio your job could be in jeopardy. In these troubling economic times, the last thing local radio needs is to be hit with a tax that some analysts estimate could be $2-7 billion annually.

Doesn’t radio already pay for music?

Radio compensates composers and songwriters to the tune of about $550 million annually. It’s widely understood that songwriters do not have the same name recognition to financially exploit themselves to make money. Performers can make money from touring and personal appearances, merchandise and other licensing and branding opportunities like perfume and clothing lines.

Radio stations also pay a royalty for streaming music over the internet, for reasons that include concerns that a perfect digital copy of the music could be captured by the end user.

Congress has continually recognized that local radio is different and should not be subject to such a fee. Local radio is free, so everyone, regardless of income, can have access to it. Local radio also has to fulfill certain “public service obligations” that other platforms do not. And importantly, the free music that radio plays provides free promotion to the record labels and artists – between $1.5 to $2.4 billion annually.

How can I get involved?

There are currently two bills pending in Congress that would levy a performance tax on local radio – H.R. 848, sponsored by Rep. John Conyers (MI-14) and S. 379, sponsored by Sen. Patrick Leahy (VT). Your members of Congress need to hear that you strongly oppose these bills.

Additionally, anti-performance tax resolutions have been introduced in the House and Senate in support of local radio. In the Senate, Sens. Blanche Lincoln (AR) and John Barrasso (WY) introduced S. Con. Res. 14, and in the House, Reps. Gene Green (TX-29) and Mike Conaway (TX-11) introduced H. Con. Res. 49. Both are known as the “Local Radio Freedom Act.” Encourage your senators and representative to cosponsor these resolux tions.

-Thank You for your time!

Mark & Walt in the Morning