Send The Bill To Radio?

There is movement on Capitol Hill to force radio stations to compensate artists for the songs that air on their stations.

On the surface, this seems perfectly reasonable. After all, the radio stations (at least theoretically) make money from the music they play. Why SHOULDN’T the artists who provide this music be compensated for this?

When well-known musicians parade themselves in front of Congress with tales of woe-financial hardships (often from early in their careers), it’s easy to see why these stories have found a sympathetic ear. Radio is the bad guy, profiting from a decades-old exemption to not be obligated to pay up. The public is likely to agree with the artists-first by sheer force of their “star power”-and secondly since there is very little understanding on the issue.

OK- first thing, I’m a radio guy, so in the interest of full disclosure, it’s fair to say that I am not an objective bystander. I am against the idea of radio paying any more than they already do for the music.

“ANY MORE?” Wait, you say, I thought that radio WASN’T paying up-and the proposal is to change that. This is where the misinformation starts. While again admitting to my bias on this issue, notwithstanding here are a few FACTS:

1) Radio stations pay MILLIONS OF DOLLARS yearly in music license fees, to ASCAP, BMI and SESAC. These royalties go to the COMPOSER, not necessarily the performing artist. So, in the case of say, Elton John or Billy Joel, who compose and perform their own music, they are ALREADY being compensated. Those who are left out are those artists who perform the music of other composers.

2) Times are tough in the record business. Illegal downloads and shrinking CD sales are causing the labels to seek other sources of revenue. Suing their customers has not exactly worked out, so instead of targeting teenagers who illegally download songs, they have now turned their crosshairs on the industry they rely on to create sales via widespread airplay (radio)

3)Record labels (the major force behind these proposals) are looking to recover dollars from the artists on their roster whose investments don’t pan out. Their initial agreements with artists are nothing short of abusive, as they deduct the costs of promoting/marketing an artist from that artist’s sales. In short, there is certainly risk—but no investment in an artist who cannot make the cash register ring. There are MANY stories of artists who sell a million copies of a single-and have virtually nothing to show for it—because the record label reimbursed themselves for the initial outlay. One might argue that the label should eat their losses if their company makes a “bad investment”-promoting an artist who doesn’t produce a hit record. Instead, it is the artist who pays-and then gets dumped by the label in favor of the “next big thing”.
Satellite radio pays performance fees, so why shouldn’t commercial radio? Well, for one thing, the satellite companies (like the now defunct Muzak) are subscription services. The public is paying a monthly fee for the service. In this case, it is reasonable that artists be compensated as a percentage of those revenues. Commercial radio is free to the user. Listeners to over-the air radio “pay” via their attention to advertising—which is the sole revenue source for commercial radio (hence the name)

4) Without radio airplay----FREE radio airplay, these artists would not sell a miniscule FRACTION of the units they do. They pay NOTHING for this widespread exposure. Shouldn’t radio demand a percentage of THEIR sales? We do not, nor have we ever entertained the notion.
5) Radio airplay represents FREE market research to artists and their labels. For every “hit” record that a station plays—one that satisfies and excites audiences-there is usually one that stations play which does the exact opposite. Radio assumes the risk when the WRONG songs get played. That cost is measured in audience erosion ( a drop in ratings)-which has a significant affect on the revenues of these stations.


The system as it is (and has been) has been mutually beneficial to artists, composers, labels and radio stations—not to mention the public. Any inequities to the artist are more likely to be found in the language of the contracts between said artists and record labels, not in the system of airplay that has existed for generations. While there may be little sentiment to defend the big radio companies out there, the passage of any kind of performance fee will have a profound effect on the radio landscape. Among those effects:

1) Many, many stations will cease playing music. It will simply be too expensive. They will gravitate to spoken-word formats (Talk Radio) not hostage by these fees. The public will pay for this with significantly less choice.
2) More than a few stations will simply go dark—out of business. Their operators will no longer be able to afford them.
3) Some of the more aggressive radio companies will declare war and decide to fight fire with fire. They will turn the tables on labels and require cash payments for airplay. This is NOT payola. It is perfectly legal to charge for airplay as long as it is DISCLOSED on the air. Listeners will hear a lot more of:

“This song is being brought to you by XXXX Records!”

In short, those with the deepest pockets will have access to the “public’s airwaves”. Not exactly what the FCC had in mind. Also, it is counter-productive to the objectives of the labels in the first place-namely, to find a new revenue stream. This is merely a classic example of “be careful what you wish for”.


Radio stations are under assault on many fronts. Satellite radio, iPods and especially the internet have eroded the perceived stature of the radio medium. Fortunately for radio, none of these threats have affected the USAGE of the medium. Of course, this should come as no surprise.

Radio’s death sentence was first handed down at the dawn of TV. Then, it was supposed to be in-car devices that played 8-tracks, then cassettes, then CDs. Nope.

Satellite radio was NEVER a threat to radio’s revenue-since advertising locally (our life blood) would never be taken by a national subscription model where “no ads” was a selling point.

The fact is that over 90% of Americans use radio each week. It remains the #1 way that people discover new music (did you hear that, record labels??) and the most influential and cost-effective way to advertise. While time spent listening is down some, it is down for ALL forms of media since the inception of the internet. Until someone invents a 25 hour day, the introduction of ANY activity that requires the expenditure of TIME will have an adverse effect on all existing media choices. Duh.

Despite all this, radio companies are like all others-groping to find ways in which the internet can play a role in their future. Everyone is hurting right now—and levying an excessive fee structure on a struggling industry will have adverse consequences for the USERS of that industry, namely the American public.

Below is a little video-I know, PROPAGANDA! But see if you don’t agree with the statements made!



http://www.youtube.com/watch?v=-hE7aI27vuo

Have a great day-for my blog in your box daily, let me know: tim.moore@citcomm.com