Berman: Performance Royalty Bill Now In The Works

Rep. HOWARD BERMAN (D-CA) confirmed to THE SAN FERNANDO VALLEY BUSINESS JOURNAL what almost everyone expected: He will soon introduce legislation that will force terrestrial radio operators to pay a performance royalty, much like the royalty being paid by Internet and satellite radio.

"We are working on getting legislation ready to introduce, which the radio guys don't like," he said. "Anybody who is transmitting radio digitally has to pay but over-the-air terrestrial is the one platform that is exempt. They have what I think of as an unfair competitive advantage.

"Right now they (terrestrial stations) are statutorily exempt from paying [performance royalties]," BERMAN continued. "We would eliminate the exemption and substitute a mechanism to determine a rate like for the musical composition for the song that is set by a rate court based on a decision from many years ago from the Southern District for New York. Every few years when it expires they decide what the new rate should be. A percentage of revenue is how the rate is determined. The bigger and more successful the station the more money they pay. The smaller the listenership and therefore the smaller the commercial revenue, the less they would pay."

Bottom line, according to BERMAN: "It is going to cost [radio stations] a few cents on the dollar. There will be some rate determination. They are selling commercial advertising and are drawing customers and are economically exploiting for their programming the work of someone else. That is what compensation is for."

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