First, let’s start off by going over your professional background a bit, and what led you to the Media Institute?
I’ve spent my entire professional career in Washington, and most of that time has been with The Media Institute.  I’ve been following media and telecom issues for thirty years, and no one could’ve envisioned today’s media landscape. When I started, cable television was one of the “new media.”  I’m still amazed at how digital technology has changed everything in less than a generation, from media business models to the way information and entertainment is created, distributed, and received.

In your view, what are some of the main ways that the Performance Rights Act could permanently and negatively alter the relationship between radio broadcasters, record companies and artists?
It would fundamentally change those relationships.  Right now, both broadcasters and record companies receive something of value from each other, even though no money is exchanged.  Radio broadcasters play recorded music, which attracts an audience that in turn attracts advertising dollars to the station.  Record companies get their music played on the air, which creates listener awareness of new songs and new artists, which in turn drives record sales. So by playing recorded music, broadcasters are generating income both for themselves and for the record companies.
                Under the Performance Rights Act, radio broadcasters would have to pay royalty fees to the record companies if they wanted to keep playing the recorded music they’ve been playing for free.  This would tip the value received in favor of the record companies. They would still get the marketing value of radio airplay, and now royalty fees in addition.  Meanwhile, the payment of royalties would reduce the bottom line of broadcasters.  That doesn’t sound like a fair deal to me.   

Could you speak on the effect it will have in ownership and programming diversity?
Radio was facing a tough time economically even before this recession, losing audience share to digital audio platforms and downloaded music. On top of that, the recession has hammered broadcaster ad revenues, with declines between 10 and 50 percent.  Now if you come along and place an additional financial burden on stations in the form of a performance fee, that’s going to send some of them over the edge. It will be particularly hard on small and minority owned stations, which already have trouble attracting advertising and obtaining financing. If your station is barely breaking even, an extra fee of even a few hundred dollars could be the final straw.
               If a minority-owned station goes off the air, you lose a lot more than music.  You also lose the news, public affairs and community-based programming the station offers.  Black and Hispanic stations serve as a touchstone for their communities, and as a primary venue for the expression of minority and ethnic viewpoints.  It would be a shame to lose any of that diversity.   

Could this severely hamper the fostering of music from new and emerging artists?
Absolutely.  A lot of the struggling stations that don’t go off the air altogether will probably switch to talk formats, so you’ll have fewer radio outlets available for new and emerging artists.  This is another way of losing programming diversity.  The record labels have always felt that radio airplay is critical for “making” a new artist.  Now the labels are touting the Performance Rights Act as a windfall for artists, but this notion backfires totally if new and emerging artists can’t even get the airplay they need to get established.      

It’s such an odd juxtaposition from where the government drew a line previously, by making it illegal for stations to be paid or compensated for airplay without proper disclosure, now this new law may demand mandatory payment for the right to broadcast music.
It is odd, but maybe not in the way you think.  When the government made it illegal to engage in “payola,” it was trying to correct what it saw as a distortion in the market for radio airplay.  Now, by proposing a compulsory license with rates set by an outside board, Congress is introducing a new distortion in the market.  It’s no longer a free market because the terms of airplay transactions would be set by law, not by negotiation between willing parties.  And here’s the kicker…When you put performance rights legislation on top of existing anti-payola legislation, you have a situation where record companies are not allowed to pay broadcasters, but broadcasters are required to pay record companies.  That doesn’t sound like a free market to me.

What do you perceive to be a mutually beneficial compromise to this issue?
A mutually beneficial compromise would be to change nothing and maintain the current system where radio stations have access to free recorded music and record companies receive the promotional value of radio airplay. What I’m suggesting is not exactly a compromise, but it would keep things mutually beneficial.  There’s a resolution in Congress now, the “Local Radio Freedom Act” (H. Con. Res. 49 and S. Con Res. 14), that endorses the status quo.  

If paying a performance fee is an absolute certainty for radio, what in the legislation would you change – the royalty rate itself, making it a more affordable flat fee for all broadcasters, etc?
If paying a performance fee were an absolute certainty (which it is not, I hasten to add), I would propose a voluntary system of negotiated payments rather than a compulsory license.  And it would be a system where payments could flow in both directions, recognizing the value of radio promotion.  In the process, I’d get rid of the Copyright Royalty Board, which has proved a great example of everything that’s wrong with bureaucrats trying to set prices.  A voluntary system would succeed or fail on its merits.  
              Right now radio broadcasters pay royalties to composers and publishers (as distinguished from artists and their record labels), but this is done on a negotiated basis with the agreed-upon fees collected by intermediary groups like ASCAP and BMI.  The fact that the record industry wants a compulsory license, with royalties mandated by law, raises a red flag.  It suggests to me that the record companies think the only way they can get paid is by convincing Congress to pass a law, not on the merits of the royalty idea.  

Do you think certain artists that have spoke up in favor of the Performance Rights Act have considered all the perspectives and consequences surrounding this issue?
About two dozen artists signed a statement in January in support of the Performance Rights Act.  The statement was filled with generalities about fostering a “partnership” between artists and radio.  It’s always easy to speak in slogans and agree with generalities.  It also stated: “We support the Performance Rights Act because it is fair to radio and fair to artists.”  An obvious point just for starters: The legislation certainly is not fair to radio, as I’ve just discussed.  Moreover, these artists wouldn’t be where they are today without the current system of free airplay driving their record sales.  And I doubt if they’ve considered how a royalty scheme could backfire on them and also hurt emerging artists.  In this statement, the artists also express solidarity with “background singers and musicians and the great legacy artists of the past decades,” implying that these folks have been shortchanged. But shortchanged by whom?  Let’s not ask radio broadcasters to make amends for the way in which record labels treat their talent.  

In your opinion will this or any variation of this legislation be passed?
I hope not.  (This might be a good place to note that The Media Institute is not a lobbying group and that what I’m saying here are my own opinions and not necessarily those of the Institute.)  Frankly, I think Congress has set other priorities for itself in the short term, like spurring job growth and investment.  Given these priorities, I would hope that members of Congress would want to do everything possible to protect the vitality and diversity of the radio stations and the thousands of radio jobs in their districts.  Imposing a new financial burden on their local stations doesn’t make any political sense. But then again, you can’t take anything for granted with Congress.