A report issued by the Government Accountability Office (GAO) warns of the effects of pending performance royalty legislation upon radio broadcasters, which, according to the GAO, would result in millions of dollars in added costs for the broadcast industry while bringing in less than $100 in extra yearly income for most recording artists. Released last Friday, the GAO report mirrors findings outlined in a preliminary study that was completed by the GAO last February and released to the public in June. The 69-page report also follows the announcement of a proposed compromise framework on performance royalties between the National Association of Broadcasters and the Recording Industry Association of America that AM and FM station licensees hope will avert potentially high royalty fees that are under consideration in the Performance Rights Act (HR-848) now pending before Congress. Although costs to individual broadcasters would vary according to each station’s annual revenue, commercial status, and contracts signed before the law’s enactment, the GAO estimated that every one-percentage point of royalty based on station revenues would cost the industry as a whole an extra $101 million per year. That added cost, continued the GAO, “could lead some stations to reduce staff, switch to a nonmusic format, or discontinue operations.” While noting that revenues for recording artists would vary according to total royalties paid, the stakeholder’s role (i.e., featured performer, background musician, back-up vocalist, copyright holder) and amount of radio airplay, the GAO estimated that 56% of performers would receive royalties of $100 or less per year and that fewer than 6% of performers would receive annual royalties in excess of $10,000 from airplay in the top 10 markets, assuming a royalty rate of 2.35% is passed into law. However, while the GAO study backs broadcaster claims that performance royalties could impose a crippling financial burden upon some station owners, the report did little to buttress industry arguments that performers benefit financially from airplay that amounts to free advertising. Citing the presence of “other promotional outlets, such as the Internet and special events, and growth of music piracy,” the GAO admitted: “the relationship between airplay and music sales is less clear than in the past.” Although broadcasters offered no comment, the U.S. Copyright Office maintained in a July letter that the GAO’s preliminary draft “neglects to acknowledge the recent upswing in the advertising market for radio” and “does not take into account revenue data indicating that, in the first quarter of 2010, radio experienced record revenue growth.”