Before the decline and still sluggish recovery of the economy, record companies for a little over two decades have been looking for a way to regain control of an industry they once reigned over with a clenched fist. Since the advent of the Compact Disc (pre-mp3s for the kids out there) we were promised a reduction in the price of albums (still in the $15-20 range) which never came to fruition. Along came the explosion of the internet and our late-friend and now corporate zombie "Napster" which changed the way we "shared" music forever and forcing the hand of record companies to reduce prices. Digitally, anyways.Before I continue, let me say that I have first-hand knowledge of this issue from my 6 years in the radio business (production & talent) and now as part of the marketing & advertising industry. What most people don't know is that all the great stuff that radio stations give away (concert tickets, MONEY, gadgets, albums, trips to ???, etc.) are paid for the most part by-wait for it... record companies! That's right. Record companies give radio stations all these goodies in exchange for airplay for whatever particular artist they seem to be gushing over at that moment. I know, this totally explains that Kesha girl.
Here's the amusing part. These now "successful" artists go back to their record companies wanting even more money than they already get from radio stations (royalties) likely due to their decline in "success" and bad contracts, so what do the record companies do? Go to the radio stations and ask for more money from the very industry that makes them money in the first place. So let's recap: Record companies give radio stations "promotional" dollars to play their artist's music which radio stations pay royalties (dollars) for playing, and the record companies want even more royalties (DOLLARS)! It's like lending someone your bike and wanting your bike and a new car in return.
So why a "performance tax"? Well, radio stations (corporations) and record companies both have lots of lobbying power in D.C., but since most record companies are now part of larger media conglomerates, record companies have a sweeter deal ($$$) for legislators in Washington. Basically, the record companies are trying to hire Washington D.C. as their "muscle" trying to force radio stations nationwide to pony up some more cash. Or as noperformancetax.org explains it: "The recording industry wants to impose a performance tax that would financially hurt local radio stations, stifle new artists and harm the listening public who rely on free local radio".
How does this affect the marketing and advertising industry? Well I'll explain the food chain in the simplest way possible. If record companies take more money from radio stations, radio stations will have to charge more money to their advertisers, which makes it more expensive (and difficult) for agency clients to purchase radio advertising which means less revenue for agencies which in turn costs jobs and increases prices on the consumers for the advertised service or product.
I would say that 80-90% of radio advertising is local businesses. For those local businesses that can and do advertise on the radio, it is far from "cheap" to do so. If radio advertising cost increases due to a federally mandated tax that only benefits record companies, jobs will be lost at many levels and as with all taxes, the cost is passed on to the consumer. Help the radio and advertising industry in stopping the greed of record companies and their artists from taking advantage of our "free" media, entertainment, and advertising outlet.
How you can help:
- Visit http://noperformancetax.org/
- Contact Senators Blanche Lincoln (D-Arkansas) and John Barrasso (R-Wyoming), along with Representatives Gene Green (D-Texas) and Michael Conaway (R-Texas), and many other members of Congress who have sponsored legislation and efforts against the performance tax.
- Follow @StopRadioTax on Twitter
