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EDITORIAL: Taxing the Billboard Top 40

Proposal to change the way we pay music artists is just a partisan ploy

- - Wednesday, October 9, 2013

Americans have been hooked on radio since 1910, when Enrico Caruso sang arias from "Cavalleria Rusticana" and "I Pagliacci" from the Metropolitan Opera stage in the first live radio broadcast — borne, as reported The New York Times, "over the turbulent waters of the sea  and over the mountainous and undulating valleys of the country." (Well, all over the sidewalks of New York, anyway.) Millions now listen to music, news and talk at home, at work or in their cars. It's bigger than ever, and it's free.

Uh, oh. Rep. Mel Watt, North Carolina Democrat, now comes up with a "royalty tax" on AM and FM radio stations, requiring them to pay fees set by the government to performers when their songs are played on the radio. Airtime has been understood as largely "free advertising." A musician's ticket to the big time has always been landing a spot among radio's Top 40, which enables artists to sell records, CDs and iTunes. This may not be the best or the fairest way, but it's simple, and it works.

Mr. Watts' legislation would create "copyright royalty judges" who would decide how much value airplay represents. Under his law, these government magistrates would set rates "that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." We suggest a simpler alternative: skip the judges, and let actual buyers and sellers set the rates.

The free market works when government doesn't get in the way. Warner Music and Clear Channel, two of the biggest players in the music and radio industry, cut a deal that provides Warner Music artists a royalty payment for songs played on the air in return for Warner agreeing to cut the excessive rates the government set for music played on the Internet.

The government price-fixing arrangement for broadcast radio, as well as the one that's already in place for Internet radio, is meant to benefit Hollywood's record labels. These companies happen to be favorites of the Democrats. Republicans shouldn't be seduced into taking sides. Too many businessmen look to the government to win an advantage against their competitors. The market knows how to sort it out.