There seems to be some stress afoot in the world of radio broadcasting. A proposed fee, which has been termed a performance tax, now threatens to take a jab at your local country music, or top forty, radio station.

Broadcasting companies such as Citadel Broadcasting (CTDB), and Radio One (ROIAK), are now facing the real possibility of having to pay newly imposed fees (taxes) for the music that they play. Opponents of the action are worried that the new fees could seriously affect virtually all local radio stations which provide mainly music based formats. Dialogue based formats would not be affected.

Large global music publisher EMI, owned by private equity firm Terra Firma, will be cutting 2,000 of its 5,500 jobs according to The Sunday Telegraph. The company will cut out duplication among the back offices of its several record labels.

Shareholders of Warner Music Group (NYSE: WMG) are certainly looking on. The publisher's stock has fallen from about $30 in mid-2006 to just over $5 last week. The digital download business and piracy has undercut critical revenue from CDs and that is not likely to end.

Apple Inc. (NASDAQ: AAPL) now controls most digital music pricing through iTunes. Music publishers have no large alternative means of marketing artists. CD sales are never likely to reverse their sales slide.

Warner is probably left with little other than to make huge cost cuts of its own. In the last quarter it had very modest operating income of $142 million on revenue of almost $3.4 billion. But, interest expense on the company's debt was over $180 million for the period.

Mass lay-offs will not solve WMG problems long term, but they may be essential for the company to make it through the next couple of years.

Douglas A. McIntyre is an editor at 247wallst.com.

The record loss in credits markets since August is dampening plans by music companies EMI and Warner Music Group Corp. (NYSE: WMG) to refinance debts and provide dividends to shareholders, while "reinvesting in core operations." The company's plans come at a time when the music industry is dealing with sharp declines in CD sales and the continued problems in the face of widespread digital growth, according to the Financial Times. Unfortunately, neither company is rumored to be pressing ahead with the plans. WMG stock has fallen nearly $20 in the past year according to the same report, a trend that could certainly welcome a boost.

These rumors come at a time when similar rumors have been announced that EMI wants to cut funding to trade groups like the Recording Industry of America, which work against piracy, and issue that the industry has been dealing with for a number of years. This plan hopes to benefit from the back catalogs of major artists and the potential future catalogs those artists will produce. The Financial Times notes "the steady revenues generated by music publishing have become increasingly prized by investors at a time when the future of the more glamorous recorded music business is uncertain." The major reason cited for that uncertainty is the industry's inability to create digital sales to replace missing CD sales.

In the end, the credit problems these companies face only indicate that new business models are needed. Luckily EMI seems to be leading some kind of change in the current model, after dropping the use of anti-piracy software in media files last April. If major retailers start to cut back on space allotted to CDs, which is another prediction the Financial Times quotes, the industry could face even more setbacks. Frankly, an expedited move toward the digital market is needed to offset a number of these problems, but that is going to take a major wake up call and changes in the credit market may serve as a needed rough shake.

Yahoo! Inc. (NASDAQ: YHOO) and SanDisk Corp. (NASDAQ:SNDK) are launching a new MP3 player with WiFi capacity, joining a host of rivals to Apple Inc.'s (NASDAQ: AAPL) iPod, including the Microsoft Corp.'s (NASDAQ: MSFT) Zune.

The iPod currently has 70% of the portable music player market, and, that number appears to be holding. If the iPhone sells well, Apple will have another horse in the music download space. Cellphones that can download music are offered by the large handset manufacturers including Nokia Corp. (NYSE: NOK) and Motorola Inc. (NYSE: MOT), but there is little evidence that they have done any damage to the iPod's growth rate.

As much as it must pain Apple's competitors, no one has been able to throw anything in front of the company to slow the momentum of the iPod and its download service iTunes. The European Union recently announced that it would look into pricing issues involving iTunes and the record companies. That may eventually hurt Apple just as antitrust actions by the EU have slowed Microsoft's progress on the Continent.

Apple's only enemy appears to be its own success.

Douglas A. McIntyre is a partner at 24/7 Wall St.