Radio & Royalties: An Edgy Argument For The Status Quo

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There’s been a lot of talk lately about performance royalties in terms of radio. The current set up is that webradio has to pay both songwriter and performance royalties, where terrestrial radio only has to pay songwriter royalties via ASCAP, BMI and SESAC licenses. Groups are lobbying Congress to change the rules — in some cases to remove the performance royalty requirement from webradio, and others to add the performance royalty to terrestrial radio.


I’m torn on this, but I tend to see the current situation (as applies to terrestrial radio) to be pretty good. Full disclosure, however — I work in radio, so I do tend to be a little biased that way. If it were up to me, I’d make it so webradio only paid composer royalties as well. This might sound a little weird — the people who write the music get paid, but the people who play it don’t, but let me explain my reasoning.

Radio play acts as a promotional tool for the single or album it’s on — that’s where the performers (ideally….) get their income from radio play (rather than royalties). I listen to the radio, I hear your single, like it, and buy your album; you get, say, a whopping dollar from the 15 dollars the CD cost… which goes to pay back your label for pressing the disc, recording it, promotion, etc. The songwriter of that single, however, only gets a(n even smaller) portion — having, say, written, maybe 1/13th of that album (for the particular song I heard on the radio, out of the rest of the cuts on the album).

If stations pay nothing to nobody for playing records, the performer comes out “ahead” (well, the label does, but that’s always the way), and the songwriter would get kind of screwed. Because if KXXX plays The Capitols’ “Cool Jerk” until the grooves wear flat, more and more people will hear it, and be potentially swayed to pick up their record. However, for all that airplay, the songwriter, Donald Storball, would get very little of that, the 1/13th share of the album. Of course, as the songwriter DOES get royalties from radio play, it works out best for everyone — the Capitols get royalties for the albums sold as a result of the promotion, and Donald Storball gets paid whenever the song airs.

For bands that write their own material (for example, this case; Donald Storball was one of the vocalists of the Capitols), this is great — you might sell as many albums as you’re ever going to sell… but as long as radio keeps playing your hit, you’re still going to make money off it. (This is why I would always urge bands to divvy up the songwriting credits equally amongst all band members — that’s often where the long-term income comes from.) On the other hand, if your band‘s one hit was a cover (say, Taco’s “Puttin’ On The Ritz”), you’re in a more tenuous position. (This goes ditto for country acts or pop acts of the past, where it was rarer to find singer/songwriters.)

That said, I could somewhat see a movement to allow for performance royalties to be charged as well, though, the current proposal isn’t the way to do it:

  • Why are talk/religious stations exempt? I can see talk being exempt from CLIPS, sure, but for when they play full songs as hour-fillers, f’rinstance? Charge ’em. Ditto Religious stations. They already do have to have ASCAP/BMI licenses, so why should they get a waiver on paying performers?
  • The idea of having the RIAA collect is so wrong. Look how well they’ve done with everything else involving getting money to performers in the past. (Which also makes it funny that the RIAA’s argument is “WON’T SOMEONE PLEASE THINK OF THE BANDS?!?!”, since, ahm, perhaps you should remove the log from your eye before talking about the mote in other people’s, huh?)
  • The Sliding Scale is a great idea — but why is it so much more than ASCAP/BMI licenses? They use a sliding scale as well, but their bottom end is $450550. Not $1000-5000.

There’ve been quite a few times this type of legislation has gone forward in the US — it’s always failed. I’m not too worried that it’ll pass this time, either. The RIAA has powerful lobbyists, though I believe Clear Channel‘s are MORE powerful. However, if this DOES pass, all we’ll see is indie bands signing away their rights to get the performance fees anyway, as has begun to happen with Internet streams of terrestrial radio stations, particularly those owned by Clear Channel. Great.

To be fair, the situation isn’t perfect any way you slice it; the ideal would be a situation where both performance royalties and composer royalties are paid — however, it seems that it would be better to fix the other problems, primarily the standard record label contracts that bill back everything to the band, first. It seems best to fix these larger problems then work on things like this — and perhaps with a bit more reasonable rates, particularly for smaller, local and/or non-commercial broadcasters — who are typically the ones to play the less mainstream stuff… in other words, the folks who could typically use the boost in income this would provide.

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