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CBO Report Estimates Performance Right Compliance for Radio as ‘Substantial’

But labels and NAB both claim the report helps their cause

Ahead of a congressional hearing on the performance rights issue, record labels and broadcasters squared off about the meaning of a report issued by the Congressional Budget Office about the potential impact of a performance royalty on commercial radio.

H.R. 848 would require terrestrial radio stations to pay royalty fees to copyright holders on sound recordings. Radio already pays royalties to songwriters for airplay. Under the bill, small, publicly owned and religious stations would pay lower royalty fees than large and commercial stations. Those broadcasters could elect to pay a flat annual rate set by the bill and based on their annual revenues.

Royalty rates for stations that have gross revenues of $1.25 million per year or more would be established by the Copyright Royalty Judges if broadcasters and performers are unable to negotiate rates on their own. Some 1,800 terrestrial radio broadcasters have gross revenues in any year of $1.25 million or more, according to the CBO report.

MusicFirst, a group backed by the record labels that has pushed for a performance royalty, says the CBO report shows such a fee would not cost taxpayers any money to implement and would not result in any revenue for the federal government.

However in its comments to media about the report, MusicFirst ignored what the report says about stations. The CBO found that the royalty fees already being paid by cable, satellite, Internet broadcasters and other digital media suggest the total cost of new performance royalties for commercial radio broadcasters affected by the bill could be “substantial.”

The CBO estimates the cost of complying with the mandate for publicly owned stations would be about $500,000 a year and that commercial broadcasters that have gross revenues of less than $1.25 million in any year would pay a total of about $16 million annually in royalty fees.

Tuesday afternoon, the Senate Judiciary Committee hears from singer Sheila E for the MusicFirst Coalition; NAB Joint Board Chairman and Commonwealth Broadcasting President/ CEO Steve Newberry; National Association of Black Owned Broadcasters Executive Director and General Counsel Jim Winston; Rounder Records Owner Marian Leighton-Levy, George Washington University Law School Adjunct Professor Ralph Oman and Real Networks EVP Bob Kimball.