I have always been amazed at how cheap radio music is for broadcasters. You might call it a 3% solution.
Radio broadcasters have provided music to listeners for many years. They have done this in several ways. At first, live presentations by artists and bands prevailed. Indeed, most networks had their own orchestras and performers, or exclusive contracts with bands for programs. Then, playing records took over as the main source of entertainment. Today, a radio station’s music library is simply a large hard drive accessed by a studio computer.
How much does a radio station pay for the music it pays? Surprisingly little.
Cheap radio music is available on radio for three reasons.
- Music is cheap to buy. Traditionally, broadcasters just bought records. This cost roughly the same for a radio station as for a consumer. You play this repeatedly for many listeners at the same time. With the switch to digital media, damage from repeated use has disappeared. The tune lasts forever. And it only costs a dollar in the first place.
- Most important, radio stations don’t pay performers any more. Performing artists are expected to make their money by selling directly to consumers. Radio stations perhaps justify this business model by considering themselves as free promotion for the artists. But radio stations do have to pay the songwriters and publishers.
- Finally, licensing fees paid by radio broadcasters to songwriters are low. Each country has a performing rights organization. SOCAN, the Society of Composers, Authors and Music Publishers is the PRO here. SOCAN is authorized by the Copyright Board of Canada to collect tariffs whenever music is performed, live or through a recording. It has reciprocal arrangements with similar PRO in other countries (such as BMI and ASCAP in the United States). Broadcaster buy a license in the home country.
Cheap Radio Music – How It Works
Performing rights organizations collect license fees. They monitor or survey radio stations and, consequently, find out how often tunes are played. Songwriters and publishers register their tunes with the local PRO.
Radio stations buy licenses from their PRO. License fee range upwards from 1.5% of gross revenue. Stations that play a lot of music pay SOCAN between 3.2% to 4.4%. Calculations are more complicated in the U.S. because there are three PRO that each take their cut. Also, there are surcharges depending on the size of the station, how often very popular standards are played, and so on. It’s been years since I had to do these calculations.
In conclusion, when you think about it, it’s cheap radio music. Recorded music may account for 85% of programming. Once a radio station buys a tune for it’s library, it can play it forever. The cost is roughly 3% of its gross revenue each year.