We Are Here to Seek Your Rents

Under current law, radio stations pay royalties to songwriters but not to performers. Naturally, performers don’t like that rule but radio stations do. Obviously, I understand that performers want to make more money, but it’s hard to see what the policy problem with the status quo is. You don’t see artists with big radio hits starving in the gutter, you see artists clamoring for the opportunity to have their songs played on the radio. Given that radio spectrum is in much shorter supply than songs, the economic logic of the situation is that artists ought to pay radio stations, not vice versa, which is why you have endless payola scandals.

But instead of standing on principle, the National Association of Broadcasts seems to have hatched a plan to perfectly exhibit the concept of rent-seeking:

Radio would agree to pay around $100 million annually to artists and their representatives. In return, Congress would mandate FM radio chips in all handheld mobile devices. The deal is reportedly being worked out between the National Association of Broadcasters and the music industry, and could be taken to Congress later this year.

Now instead of simply transferring wealth from radio stations to artists (“and their representatives”) we’re going to transfer wealth from device makers and consumers to radio stations, and then have the stations pass a share of that wealth on to artists. All to solve the non-problem of artists not receiving any compensation for allowing radio stations to give them massive amounts of valuable free publicity. The good news is that device-makers have a lobby too, and in situations like that there’s actually some room for congress to consider the merits of an issue. Anyways, I wouldn’t want to get too melodramatic about this, but I think you’d have to say that the “handheld mobile device” sector is the single most vibrant slice of the American economy at the present moment so it’d be mighty odd to slap a de facto tax on their for no reason whatsoever.