The National Association of Broadcasters has an ongoing campaign to avoid paying royalties to performers. According to the NAB, the royalty would be a “tax”. Terrestrial radio enjoys the ability to play music without having to pay performance royalties. In theory, the trade off is that radio airplay encourages record sales, and thus the artists and performers are being rewarded by radio playing their songs. While this theory seems reasonable, record sales are down, and other mediums such as satellite radio and Internet radio do have to pay the royalties.

As part of their campaign, the NAB has quoted many artists who have expressed thanks to radio. If one were to read an NAB Press Release, you would believe that the artists they are quoting do not want to receive royalties, and like things the way they are. However, if you do a bit more research, you will find that the NAB is taking things out of context (something which they also did in the Sirius XM merger with regard to Toyota).

For example, in a recent press release about the royalty issue the NAB stated that on numerous occasions, both record label executives and artists have recognized the promotional value of free radio airplay. Such statements include:

“I love a strong radio hit. All of us. That’s what our job is, to have a radio hit. Without radio, we couldn’t do what we do, but the job is to have a radio hit that sounds unique, and like you.” — Jewel, Grammy-nominated recording artist, ‘Nashville Star,’ July 2008

Interestingly, Jewel is an artist who is in full support of Music First, an organization seeking “Fairness In Radio Starting Today”. Music First is seeking fair royalties from all mediums which play music. Who is a consumer to believe? The NAB, who offered up a quote, or the artist themselves who has penned their name to a fair royalty system? Something tells me that once again, terrestrial radio is profiting off of something that is not theirs.

Perhaps this was simply an oversight by the NAB. WRONG

The very next quote the NAB rolls out is John Rich from Big & Rich.

“Alright, let’s talk about the nuts and bolts. If you win ‘Nashville Star’, you have to get on 200 major market radio stations. You have to.” — John Rich, Big and Rich, ‘Nashville Star,’ July 2008

Yep, John Rich understands the game. However, given that his name is on Music First’s supporting artist petition, it would appear that john Rich does not like the current rules.

Now in fairness tho the NAB, Alicia Keyes is quoted, and thus far, she has not signed the Music First petition. The same is true for Rascal Flatts, Taylor swift, and Eddie Daye. However, BB King is a Music First supporter.

So where is the disconnect? How can artists be behind the NAB solution of no royalty when they are putting their name to petitions seeking this compensation. The answer is simple. In many cases, the NAB is taking the artists quotes out of context. The NAB has an organization of their own. It is called Free Radio, and it lists the reasons that the NAB feels that they should not pay royalties. Who are the members of Free Radio? The list is long, but lacking in one important area. There are no artists on the list. Instead it is broadcasting companies and radio stations, with a yacht club or two thrown in for good measure. Compare that to the Music First member list and you will see which side of the issue artists are really on.

Satellite radio investors may wonder what this has to do with anything. the answer is simple. satellite radio, and Internet radio are paying royalties. Terrestrial is not. While the royalties do add an expense to the cost of doing business, it likely pales in comparison to the free ride and distinct competitive advantage that terrestrial radio is getting.

The NAB will trot out a whole list of lawmakers who support their legislation. Ever see who contributes to those lawmakers campaigns? Music First will trot out the artists. This is not about the record companies. It is about the artists who give us enjoyment each day as we commute to work.

No matter what your feelings on the matter, participation is important. Music First makes it easy to learn about the bill they endorse, what it says, and even add your comments via a letter to your representatives.

Audio entertainment is morphing each day. Consider this an issue that will have ramifications on all of the existing services you enjoy.

Position: Long Sirius XM, For fair royalties.