Congress is considering a bill that could upend the way money gets distributed in the music business by giving artists and record labels a share of broadcasters' take. The legislation would force radio companies to pay royalties of as much as $500 million a year to record labels and artists whose music they play. Radio already pays about that same amount in royalties to songwriters and music publishers. The House Judiciary Committee could vote on the bill as early as next week; the Senate Judiciary Committee is likely to advance its version of the bill in the next few weeks. At that point, the full chambers could vote on the bill, or more likely, congressional leaders could ask that the broadcasters and the music industry negotiate a resolution themselves, to be ratified by Congress. If the deal goes through, it could change the economics in the struggling music industry. Though many radio companies still record sizable profits on an operating basis, they have come under growing pressure recently as the advertising market dwindles. With many of them struggling to maintain various financial targets to avoid breaching debt covenants, any additional expenses could send them one step closer to financial restructuring. Record labels, meanwhile, have been fighting for survival as sales of recorded music have plummeted in recent years. Extra royalty income, while doing nothing to solve the underlying challenge of declining sales, could represent a modest increase in revenue on top of the $8.5 billion in shipments to physical and digital retailers reported last year by the Recording Industry Association of America, or RIAA. It would also restore some momentum to an industry that is suffering severely from image problems.
