BY KURT HANSON
Although the House Judiciary subcommittee hearings last week on establishing a sound recordings performance royalty for broadcast radio were characterized as an effort to help struggling semi-retired performers like Sam Moore (of Sam & Dave) and Judy Collins, a statistical analysis reveals that the largest individual beneficiaries would be the major record labels... by several orders of magnitude.

Specifically, if a performance royalty similar to the musical works (i.e., composers') royalty was imposed on broadcast radio, it appears that Sam Moore might get an annual check of $12,000... while at the same time the average "Big Four" record label would get an annual check of $50 million!

And while Judy Collins was articulately speaking to Congress in favor of this royalty, characterizing it as long-due compenstation for suffering artists (while labels would garner their annual checks for $50,000,000), she would see a check for only $900 per year!

Let's do the math
According to monitored airplay statistics obtained by RAIN, last year,on the nation's top 1,500 or so music radio stations, Sam & Dave (pictured left) got about 13,000 "spins," comprising .0082% of all songs played on those stations, while Judy Collins got about 450 spins, comprising .0003% of songs played.

If one assumes that a successful performance royalty initiative — essentially, Congress taking away radio industry profits and giving them to the recording industry instead — got the music industry 3% of the radio industry's $20 billion in revenues.

Well, let's do the math:  3% of $20 billion is $600 million.  Half would probably go, by statute, to labels;that's $300 million.  The four major labels would probably split up 67% (or more) of their half; that's $200 million split four ways, or, on average, $50 million each.

Meanwhile, Sam & Dave would get .0082% of the artists' $300 million, with Sam getting half of that, or about $12,000, and Judy Collins would get .0003% of $300 million, or about $900.

Royalty little benefit to catalog artists
It seems reasonable to argue that radio airplay is most valuable at the peak of an artist's career — i.e., when they have current hit releases. It's radio airplay that gave Sam & Dave and Judy Collins their careers.

Speaking to Inside Radio, Cox Radio CEO Bob Neil (pictured below) said, "The figures show just how little these older acts would benefit because their music doesn’t getanywhere near the airplay of the artists of today. So, the artists of today who get paid more in one year than people like Sam made in most of his life, will be the ones to benefit more from any performance rights tax on radio, along with the big record companies who will split the big money among just a few players to feed their never ending greed."

Right now, in 2007, radio is setting up hundreds of artists with careers for life. For example, a number of Adult Contemporary, Top 40, and Country music artists are making lots of money right now (and hopefully saving some of it for their retirement) and will all have a certain fan base that will support them to some extent for the rest of their lives.

However, royalties for catalog airplay don't factor in to the argument as heavily as airplay for current songs and hits.

Have any experiences from the radio and record industries that could illuminate new aspects of these arguments? Let us know by using our feedback form directly below this story to comment.

From Eliot Van Buskirk's "Listening Post" blog in Wired: "SoundExchange, the music industry's digital-royalty collection agency, has been on a roll.

"A federal appeals court recently rejected a plea from webcasters to postpone the deadline for a new royalty scheme that sets the stage for SoundExchange to begin levying billions of dollars from internet radio stations in the coming decades. It already collects a tidy sum from satellite radio and now it has set its sights on U.S. terrestrial radio stations, which currently pay no broadcast performance royalties. If it wins there, its power could grow exponentially...

"Knowing well the dangers, legislators sought to restrict SoundExchange's ability to spend the money it collects on behalf of artists and labels. Section 114(g)(3) of the Copyright Act explicitly limits how the nonprofit can spend the money it collects, approving just three carefully circumscribed activities:

"So it came as quite a surprise when a source familiar with SoundExchange told me on condition of anonymity that the group is engaged in lobbying and public relations activities, in apparent violation of the law cited above.

Lobbying, PR appear to violate law
"A little fact-checking showed that SoundExchange registered the MusicFirstCoalition.org domain on May 9, 2007; that it is a member of the organization; and that SoundExchange supports musicFIRST financially...

"Asked about the legality of the lobbying expenditures, SoundExchange Executive Director John Simson [pictured] dodged the question. 'Clearly the Broadcasters will do or say anything so as not to pay artists for their work,' he wrote in an e-mail. 'We welcome a full and open debate before Congress on ending the unfair free ride given over-the-air radio and the granting to artists the long overdue right to be paid for their recordings when they are played.'

"Michael Huppe, general counsel for SoundExchange, was more helpful on the legal question. He said the funding was a legitimate use of its members' money. 'Funding provided by SoundExchange to musicFIRST is authorized by copyright owners and performers who have chosen to become members of SoundExchange. These contributions come only from our members and not from non-member royalties...'

"In the end, however, SoundExchange could not point to a specific statute that allows them to contribute to musicFIRST...

"Shoshana Zisk, a music attorney in San Francisco, said, 'Upon reading Copyright Act Section 114(g)(3), it would appear that funding a lobbying or PR organization (such as musicFIRST) is a violation of this provision.'

A call for SoundEx to remain neutral
"Whether or not SoundExchange's lobbying efforts prove to be illegal, its presence as an advocate in this debate undercuts its role as neutral administrator of royalty fees set and approved by the Copyright Royalty Board...

"Yet SoundExchange's interest in the outcome is as clear as the interest of the artists and labels it represents. If new fees are approved for terrestrial radio and SoundExchange is appointed to administer those fees, it will instantly become a much bigger player in the music industry... With more power would come greater status and bigger paychecks for its officers and directors...

"That's why Congress intended to keep SoundExchange out of the lobbying business. In keeping with the spirit of the law, SoundExchange should immediately sever its ties to musicFirst and any other lobbying group it funds or assists, and fulfill its role as a neutral administrator of fees."

Read Van Buskirk's entire blog entry here.

From SiliconValley.com: "Notebook computers

"The Santa Clara chip maker this week began shipping a chipset — or package of chips — that includes WiMax to computer makers for testing, said Sriram Viswanathan, a general manager. It anticipates the product, called Echo Peak, will be available commercially in late 2008...

"It will be built into portable computers and mobile Internet devices, making access to WiMax networks easier. Intel has delayed the release of the product several times."

Subscribers can read the full story at SiliconValley.com.

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