11-21-2012
Set aside for a moment radio's long standing love affair with artists and labels, dating back to the beginning of musical time, when it was a big deal for an artist to hear their music played and promoted on a local radio station. Certainly times have changed. The call in recent months has been about establishing a fair playground for everyone who distributes music. Radio is no longer the only way and everyone understands that. Assistant Professor of Business Administration at Washington and Lee University, David Touve has calculated that if "Big Radio" had to pay what Pandora has to pay for music, "Big Radio" would owe billions.
Here is a quick look at how Touve came up with his numbers. You can also check out his blog post HERE for more detail. In his analysis he estimates 9, 12, and 15 songs per hour and uses Arbitron's published estimates of the US Listening Audience (aged 12 and greater) at various times of the day, which he places at around 8.8% of the 12+ population.
"And so, at 12 songs per hour given an average radio listening audience throughout the day of 8.8% of the population age 12 and higher, so-called "Big Radio" would owe $2,469,294,195 (at the rate of $0.0011) in royalties for the performance of sound recordings if treated like a pureplay webcaster."
"If "Big Radio" were treated like a default webcaster, at 12 songs per hour given an average radio listening audience throughout the day of 8.8% of the population age 12 and higher, that "Big Radio" would owe $4,714,107,000 (at the rate of $0.0021 ) in royalties for the performance of sound recordings."
(11/21/2012 6:12:23 PM)
If big & little stations charged the artists/record companies to play the music there would be no music on the radio and music radio would be a stinking corpse.
Meanwhile, I still am missing how an internet station based in, say, Belize, would be charged by anybody else because residents of this or that country went online to hear some tunes. I mean, who gets the invoice and who has the authority to collect?
And if big and little artists and big and little record companies had to pay regular advertising rates to get their recorded product advertised, exposed and promoted, as all other companies pay to advertise their products and services, they would pay billions in advertising dollars to big and little radio stations.
I say equalize the artists and record companies with all other companies and charge them regular advertising rates to advertise, expose and promote their recorded product.
Re: "Radio is not a dying industry, try asking a real audience who depended on broadcast radio during the recent storms... Broadcast Radio is NOT all about music, if you think it is, then you don't know radio or ever worked successfully in it."
Haven't heard anyone with knowledge say radio is dying, but its business model is changing. As for your "...asking a real audience...", do you realize how pompous this sounds? Not all broadcasters on the East Coast participated in warning the public - some just played music.
Another arrogant statement is "Broadcast Radio is NOT all about music, if you think it is, then you don't know radio or ever worked successfully in it." This sounds like a member of the Tea Party calling anyone who disagrees unpatriotic. I spent 2 decades successfully competing in major market radio, and nearly another decade paying my dues to get there, just like hundreds of people who have been warning of this digital change for radio.
Ronald, about your "...wonder what stops internet broadcasters from originating off-shore..." Where your servers are located isn't what's paid on, it's where your listeners reside. Triton Digital's September "Webcast Metrics" reports 99.2% of Clear Channel E&M's Mon-Fri Average Active Sessions are from the U.S., with Cumulus showing 98.%. Pandora's audience was 100% U.S. (Pandora started streaming in Australia last month.)
Reaching audience in other lands means each company needs to pay performance royalties in the country of residence for the listener.
Here's a fact: The U.S. is one of only five other counties where broadcasters do not pay this performance royalty. The others are China, Iran, North Korea, Rwanda.
Please note: I am not for paying this "performance fee," especially to new artists seeking exposure. For me it has come to the point where having broadcasters not pay puts them into a class that doesn't exist, and it gives an unfair advantage. What's good for one music-intensive business is good for another.
It got this way because broadcasters didn't say a word when others were getting hammered with fees.
actually Andy if you look up public records Pandora paid 136 million in royalties for 2011 and because listening is up this year I would expect them to pay more than that for 2012
(11/21/2012 1:39:24 PM)
In response to Andy Collins' comment "does this mean Pandora is pays $150,000,000 a year,,,I hardly think so."
In fact, Pandora will pay well north of $200,000,000 this year.
Check out this report of their 2nd quarter results:
"During Q2 FY13, Pandora paid $60.5 million -- or just under 60% of its revenue -- in royalties to the music industry. "
http://www.kurthanson.com/category/issue-title/rain-830-pandora-nearly-doubles-mobile-revenue-royalty-costs-still-account-majo
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