Every time I hear that radio commercial on Clear Channel stations I cringe and get angry.

I expect lies in political advertising but this ad has nothing to do with politics – although that’s how the issue in the ad is framed.

Maybe you’ve heard it.

“Now the off-shore record companies want the government to bail them out with our money,” the claim says, “and that takes money from our community.”

Hogwash.

The Record Companies have not lobbied Obama or Congress for bailout money. Have not.

First, let me say how much I like the people who run the local Clear Channel stations. I listen to KFAB and KGOR quite a bit and I have friends who work at these stations and I think the stations are fine members of the community.

But they are not responsible for these spots; it’s a corporate thing.

Clear Media, who recently changed their name from Clear Channel, in an effort to restructure their onerous debt, is worried about the likelihood that Performance Rights Fee legislation will pass Congress this year. They should be.

I first wrote about this issue in February.

Terrestrial Radio in the United States is exempt from having to pay “performance rights royalties” to artists and labels and this legislation is an effort to reverse this exemption. Radio all over the world pays this royalty as does Internet and satellite radio, including the U.S.

U.S. terrestrial radio lobbied for this exemption decades ago arguing that they promoted these works and that artists subsequently profited from this promotion. Today, however, people discover and access music through so many diverse channels that radio can longer claim they deserve an exemption for “promotion.”

The landscape has changed. Technology has changed (duh!), revenues for physical sales are in decline and radio increasingly does not support new music (or indie artists despite federal mandates to do so) so artists, content owners and now it appears Congress, too, think the exemption is no longer valid.

The Performance Rights Fee bill (HR 848) has advanced out of committee and is headed for floor debate and many predict it will pass this year after attempts in previous years.

This is a BIG game changer for radio should this pass. Advertising revenues are in severe decline and this will add a big expense for stations already struggling to figure out how to monetize the their Web sites to prop up business.

So, that’s why radio wants to frame this debate as if this new “tax,” as they choose to call it, is essentially money moving off shore to non-U.S. businesses, characterized as such because the four major record label groups are foreign-owned. But, this is not a tax because the money doesn’t go to the government. It goes to artists.

Sure, this could have an impact on my radio show but my position is there should be a level playing field. Either all radio pays this, or no radio pays this. Despite extremely low revenues for Web radio, they are required to pay this royalty. Doesn’t seem fair, does it?

The down side of passing this legislation? Smaller market, locally-owned radio stations could find this new royalty fee very challenging and could jeopardize their operations because these mom and pop-run businesses are usually close to break-even propositions. On a positive note, there is wording in the bill that would charge an annual fee based on the station’s annual gross revenue, so the fee for smaller operations would be scaled proportionately.

If it does pass, should we prepare to lose our favorite stations as they change format to “news talk” to avoid the fee?