The Performance Rights Tax - Part 2

The RIAA made a huge mistake when Napster became a major distribution channel: instead of embracing the technology and working with Shawn Fanning to create the world’s first major digital sales and distribution network, the RIAA filed suit.

The shutdown of Napster caused the open-source programmers to revolt and create decentralized Peer-To-Peer  networks to share music, knowing that without a central server, there would be no central server the RIAA could sue and shut down.
 
And they were right: almost all the RIAA suits against individuals have been dropped, or are viewed by the general public as blatant corporate greed.

The RIAA also attempted to change the laws protecting a user’s right to copy their purchased CD’s to another medium. Since efforts to stop people from distributing music legally were fruitless (it could be argued that the RIAA is the single largest catalyst that contributed to the technology and networks in use today to distribute music via P2P networks!) they thought that by outlawing the ability to make copies of CD’s, they would be able to prevent MP3’s from making it to the web.

Wrong again.

The Performance Rights Tax is another piece of legislation being pushed by the RIAA with the sole intent of collecting money due to declining sales. Basically stated, this means that every radio station will be required to pay a fee to the labels for every song they play.

Let’s stop and think about that for a second…

Historically, radio was THE promotional tool for the labels. Radio was where most people heard a new artist for the very first time.

Radio stations already pay a  hefty fee to BMI and ASCAP to play commercial music, and this tax would go on top of that fee. Stations are also seeing their listener base shrink drastically as many listeners are turning to satellite services and their own MP3 collections instead of listening to the same 50 songs every day.

Radio relies on advertising to pay the bills, and that income is dropping as advertisers realize that radio is not reaching their target audience anymore. Today, most radio stations are only marginally profitable.

So what will happen if the tax is approved? Stations will be forced to either make cuts elsewhere in their budgets, or stop playing music.

This means some stations may decide to lay off air personalities so the station can just play music and ads. I expect many smaller stations will decide to not play major label artists at all, and either embrace unknown or independent artists, or move to a talk-radio format.

Either way, the RIAA has slammed the final nail in the coffin: they will effectively kill the biggest promotional tool they had.

While this may be a sad day for many of the old-school generation, perhaps freeing radio from the same repetitive corporate playlists and embracing local and unknown artists might just be the beginning of something great.

We might just start to see independent radio stations on the air again since the smaller stations cannot afford to be part of the corporate world.

What do you think?