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Warfield: 'This Bill Is Not Fair'
WASHINGTON -- June 11, 2008: At today's marathon hearing on the Performance Rights Act by the House Judiciary Committee's Subcommittee on Courts, the Internet, and Intellectual Property, ICBS Broadcast Holdings President/COO Charles Warfield, testifying on behalf of the NAB, said broadcasters oppose the bill "for one simple reason: This bill is not fair."
He noted that, along with broadcasters, artists were represented at the hearing -- by Nancy Sinatra and American Federation of Musicians President/CEO Tom Lee -- and said, "The witness table is missing the third arm of the music-industry trio: the Recording Industry Association of America, or RIAA, which represents the big four record labels."
Warfield asked if it is fair that, under the PRA, record labels will take 50 percent of any royalties collected and added, "Unfortunately, RIAA is not here to explain why it needs half of a new performance fee that is designed for artist compensation."
Warfield blamed the sad economic situation of many on "inequitable, one-sided contracts" with their labels and said, "The reason these older artists are slogging from city to city instead of spending time with their families is not local radio. It's their record label."
Several subcommittee members in their opening statements cited the case of Bo Diddley, who toured nearly until his death, and Warfield noted that Diddley and his contemporaries were often paid a flat fee for their recordings, with all rights left in the hands of their labels. He also addressed observations about achieving "parity" between radio other audio outlets that pay royalties, saying that "no true local parity can exist." Radio, he noted, has heavy regulatory burdens other outlets don't have. He said, "We are local, we are free, we are purely promotional, and true parity cannot exist."
Warfield concluded, "The current symbiotic relationship that has existed for years between the radio and recording industries is the very essence of fairness. But H.R. 4789 takes this balanced system and places the heavy thumb of government on one side of the scale."
Later, asked by Rep. Ric Keller (R-FL) about the effect on radio's local service if the bill were passed, Warfield said it's possible that some operators would have to make changes. "I think there would certainly be a diminution of services provided to the community," he said.
Asked by Rep. Sheila Jackson Lee (D-TX) about the revenue at ICBC's stations, Warfield said he could speak for the industry overall, and radio revenues came in at about $20 billion in 2007, the same as 1999. "We're trying to continue to be viable," he said.
Rep. Steve Cohen (D-TN) later if radio could just raise "just increase your advertising costs" by a projected 5 to 7 percent to cover the royalties -- comparable to what's paid to publishers -- to which Warfield and Commonwealth Broadcasting President/CEO Steve Newberry, also there to testify at the hearing, responded almost simultaneously that it would not be possible. "Not in today's economy," Newberry said.
After Warfield pointed out that advertisers would "do what has been happening, they would buy less advertising, Cohen said, "I didn't realize the industry was hurting that bad" and said executives' increased compensation has been covered by advertising -- to which Newberry responded that his own compensation has been flat for five years, while Warfield said his has been down.
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