Broadcast Radio versus the Recording Industry

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According to Roll Call, which is the Congressional newspaper, the Recording Industry Association of America, or RIAA, is joining forces with several artists' organizations to push Congress to require that broadcast radio stations pay royalties to performers. This is an entirely new issue and one that will be hotly argued by all sides.

A bit of royalty background is in order. If a record is played on broadcast radio right now, a royalty is paid to the songwriter. But no royalty is paid to the recording artist who sang the song - that is the performer, or their label.

This means Jimi Hendrix earned nothing from radio airplay of All Along the Watchtower, originally written by Bob Dylan.  Nor did Aretha Franklin earn any radio royalties for Respect, originally penned by Otis Redding. The list goes on and on. There are millions of songs made famous by someone other than the songwriter.

It's important to note that satellite and Internet radio do pay royalties to the songwriters, the performers and the labels.  But broadcast radio does not.

Why such an imbalanced system of compensation for work?  Historically, American broadcast radio has argued that performers and record labels benefit from the free promotion of having their music played on the radio. With radio airplay, sales increase, which leads to secondary compensation for the performers and record labels.  As a result, for over half a century, broadcasters have convinced Congress that they should be exempt from paying these royalties.

The reality is that every other first world country pays a royalty to the singer, the songwriter and the label.  America broadcast radio should never have been exempt.

In response to the rumor of the impending fight, the National Association of Broadcasters is gearing up.  David Rehr, the head of the NAB said,  "We will fight…very aggressively.  Broadcasters generate enormous sums of money for record labels by the airplay of their music. Airplay of music works for the benefit of the record labels and their CEOs who live in Hollywood Hills.”

It’s pretty unbelievable that in this day and age, the head of the NAB would still be slinging mud about a big bad record business taking profits from the poor commercial radio world.  Does he really think we believe the CEO's of Clear Channel and Emmis are struggling to survive?

The reality is, that since Eliot Spitzer killed payola in this country, record labels and broadcast radio have become strange bedfellows. Radio airplay rarely equates to sizeable sales,  so labels and artists are looking to get compensated for their work in more traditional ways.