WASHINGTON — With CD sales tumbling, record companies and musicians are looking at a new potential pot of money: royalties from broadcast radio stations.
For years, stations have paid royalties to composers and publishers when they played their songs. But they enjoy a federal exemption when paying the performers and record labels because, they argue, the airplay sells music.
Now, the Recording Industry Assn. of America and several artists' groups are getting ready to push Congress to repeal the exemption, a move that could generate hundreds of millions of dollars annually in new royalties.
Mary Wilson, who with Diana Ross and Florence Ballard formed the original Supremes, said the exemption was unfair and forced older musicians to continue touring to pay their bills.
"After so many years of not being compensated, it would be nice now at this late date to at least start," the 63-year-old Las Vegas resident said in Milwaukee, where she was performing at the Potawatomi Bingo Casino. "They've gotten 50-some years of free play. Now maybe it's time to pay up."
The decision to take on the volatile performance royalty issue again highlights the rough times the music industry is facing as listeners abandon compact discs for digital downloads, often listening to music shared with friends or obtained from file-sharing sites.
"The creation of music is suffering because of declining sales," said RIAA Chief Executive Mitch Bainwol. "We clearly have a more difficult time tolerating gaps in revenues that should be there."
It's not the first attempt to kill the exemption. In the past, politically powerful broadcasters beat back those efforts.
But with satellite and Internet radio forced to pay "public performance royalties" and Web broadcasters up in arms about a recent federal decision to boost their performance royalty rate, the record companies and musicians have a strong hand.
Broadcasters are already girding for the fight, expected to last more than a year. In a letter to lawmakers this month, the National Assn. of Broadcasters dubbed the royalties a "performance tax" that would upend the 70-year "mutually beneficial relationship" between radio stations and the recording industry.
"The existing system actually provides the epitome of fairness for all parties: free music for free promotion," wrote NAB President David Rehr.
