It’s Not a Tax

For years, there has been an ongoing dispute between broadcast radio and recording artists about whether or not broadcasters should be required to compensate recording artists for the use of their music. Under the current law, digital radio, satellite radio, and cable radio are all required to pay royalties in order to play music, yet regular, terrestrial broadcast companies are exempt from paying for the music they play. The proposed amendment – which has also been endorsed by the Obama Administration – would change the language of the legislation to require terrestrial broadcast stations to also pay royalties for their music. On Thursday, April 1 the Department of Commerce reiterated its support of the proposed amendment to the Performance Rights Act, calling it a “matter of fundamental fairness.” Naturally, the broadcast industry is up in arms.

Broadcast stations are calling the new payment a “tax”, which is an incorrect use of the term. A “tax” is an involuntary payment to government, while what the legislation proposes is really “royalties”. Grover Norquist of Americans for Tax Reform and Kelsey Zahourek of the Property Rights Alliance, in an op-ed in Roll Call on Friday, explained the difference between the two methods of payment.

Music is a form of property and deserves protection just like literature, patents, and private real estate. Currently, terrestrial broadcast radio is allowed to play music free of charge, meaning musicians and recording studios receive no compensation for their work. Every other form of radio broadcasting is required to pay musicians for the rights to broadcast their music, and terrestrial radio should be no different.