Current times are tough for the radio industry. It used to be that all a radio station had to worry about were teenagers pushing pre-set buttons to change a station everytime a commercial played. That was not too bad since radio in the old days was a zero sum game. Everytime one station lost a listener who pushed the pre-set to another station, some other listener of another station would push the pre-set back to the first station. Over time, there was usually not a net loss of ears. And radio stations accepted the pre-set push buttons without too much concern for loss of listenership and ad revenue.
Today is different. The pre-set buttons remain. But added to this mix are portable CD players, iPods, iPhones, PDAs, satellite receivers, cable music and Internet radio stations. While each of these new media comes with a cost to the listener, they are usually (but not always) devoid of advertising.
There are so many different ways to listen to music today that it's a wonder how radio stations can compete and make any money by playing music. Some stations have given up on music and converted to talk: about sports, about politics, about news, or just talk. There is a lot less music on the radio waves today.
Now Congress is seeking to impose an additional burden on what is left of the radio music business. Congress wants to modify the Copyright Act to impose a performance royalty obligation on radio stations for playing music. Presently, radio stations must pay a royalty to the composer of music when a composer's song is given air time. But radio stations have never in the history of this country been required to pay a second royalty to the performers who sing and play the composition.
This may change in the coming few months as Congress appears determined to "level the playing field." Congress wants music radio to pay a second royalty to the performers of the song in addition to the underlying royalty to the composer of the song. This all seems fair on the surface. After all, why should music radio be able to play a song for free without paying a performance royalty?
Historically, radio stations provided an incredible service to music performers. When a new band cut a record, the local station would provide free air time and publicity for the record. This, hopefully, induced record sales. The system worked well. The band and the record label did not pay to play (at least that was the rule, although payola scandals have erupted from time to time), and the radio station received music free from a performance royalty.
This system no longer works very well. Now, the new band's recording can just as easily gain listenership via the Internet or Twitter or local concerts or self-pressed CDs sold at a concert venue or at college coffee shops. Further, the new media -- that easily accommodates mostly ad-free music listening -- has increased competition for music radio and diluted the available audience. Music radio now must worry about the listener who pushes a pre-set plus worry over a listener who switches to satelite radio or the iPod. It is no longer a zero sum game for music radio.
Ad rates for radio are down. Listenership is diluted. Radio station values are depressed. Added to all of this, Congress wants to add a new cost factor with a music performance royalty.
Morally, it is hard to argue against the concept of a performance royalty. It is only fair that radio pays for what it plays. But the economics of music radio today are much different than a few years ago. Today, music radio is fighting for its economic life. Perhaps this is one of those problems that Congress should acknowledge doesn't need fixing. By modifying the copyright law to allow music performance royalties, Congress may be adding the final straw to the music radio industry. Congress should Get Back, give music radio some R E S P E C T, and just Let It Be.
"And she'll have had fun, fun, fun, 'Till her daddy takes the [radio] away." (Regrets to Wilson/Love, 1964).
Anyone want to buy a radio station?
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