Radio royalties: Do radio stations pay to play music?
Do radio stations pay to play music? Since, most of the time, you don’t pay to listen to the songs on your favorite radio channel and can sometimes be difficult to understand how artists and songwriters get paid. Radio royalties are a complex thing.
Despite common belief, radio stations rarely cut a check to artists for the songs they want to showcase on their FM broadcast. With thousands of radio stations around the world, all playing hundreds of songs every day, a direct payment method just wouldn’t work.
To make things a little more streamlined, Performing Rights Organizations collect performance royalties, distribute them to artists, and ensure everyone gets paid.
Confused? Here’s your behind-the-scenes guide to the radio royalty.
Do radio stations pay royalties?
The simple answer to the question: “Do radio stations have to pay royalties?” is yes. These stations, often funded by charities or commercial advertisements, need to pay to purchase a blanket license from a group called the Performance Rights Organization.
The station reports the songs it uses back to the “PRO”, which allocates and distributes royalties from the license to the proper representatives and artists. The process is a little convoluted, so it can take a while for people to get paid, but everyone gets what they’re owed eventually.
Notably, both recording artists and songwriters often receive royalties when music is played on the radio in most parts of the world – but this isn’t the case for the US. Only songwriters and publishers receive loyalties in the US.
Do artists get paid for radio play?
While in most parts of the world, artists, and songwriters both receive royalties, this isn’t the case for US recording artists, because the country has not signed the 1961 Rome Convention. The convention guidelines recognize the rights of recording artists, and the royalties they’re owed.
The US is one of just four countries not paying royalties to recording artists. The issue has prompted a lot of arguments over the years, with many artists trying to push changes in the legislation throughout America.
However, the primary justification of most US groups is radio play is “public”, which means it should be covered by public performance royalties.
Radio stations also argue airplay rotation is such a significant promotion for the artists further compensation shouldn’t be required.
Do radio stations pay to play songs?
How radio royalties work
So, how do radio royalties work in the US, if they’re not paid to recording artists?
As mentioned above, the radio station starts by purchasing a blanket license, or series of licenses from the local PRO, or administration body. This PRO will usually represent an entire local repertoire and have partnerships with other PROs worldwide to license a range of music options.
In some cases, around the globe, one PRO could be enough to allow stations to play all different kinds of music from around the world. However, the US does things a little differently. The States has a number of PROs, allowing songwriters and publishers to sign up with groups like the BMI, SESAC, Soundexchange, or ASCAP.
If a station wanted to have access to all songs, they’d need a license from all four PROs. The price of those licenses can depend on a lot of factors, including the radio’s audience. For instance, a license for a college radio station depends on the number of students attending the school.
A license for a commercial radio will cost a set percentage of the radio’s revenue. Usually, the cost is around 1.7% for each license, though rates may be subject to negotiation.
After purchasing the blanket license, the radio plays its songs, and reports the songs aired back to the RPO. Radio programmers must keep a record of all songs put on air, so the PRO can allocate percentages from the blanket license fees to the songwriters featured on air.
The process of radio reporting can be somewhat problematic, as the scale of radio programming can allow human errors to start taking place. Throughout the years, radio reporting data can often contain a lot of mistakes.
Additionally, corrupted broadcast logs make it harder for PROs to identify the songwriters behind the music, so royalties are collected, but never paid out.
Issues with the overall reporting system has pushed the music industry (mostly publishers), to start looking for third-party tracking tools capable of helping them claim the right royalties.
How much are royalties for songs on the radio?
As mentioned above, creators in the music industry need to receive payment for the content they offer to radio stations. In the US, it’s only the songwriter and publishers who get the royalties, but this doesn’t necessarily mean blanket licenses are any less expensive.
Notably, not all radio spins will generate the same amount of royalty to songwriters. The four different PRO systems in the US use different systems of weights and credits to define the value of each spin.
The exact cost will depend on factors like:
Radio type and audience: Radio type, such as commercial, college, and noncommercial, as well as the audience size will determine some of the blanket license fees.
Performance duration: Radios can sometimes play excerpts of songs, rather than the full tune on air, which might lead to a portion of a royalty.
Song popularity: Most PROs will have bonus rates to apply to songs which cross a specific threshold of spins.
Song longevity: Songs which stay popular and on the air for extended periods of time are called “radio standard” and may sometimes earn bonus royalties.
How much do radio stations pay per song?
The question, “How much does it cost to play a song on the radio” can be quite complicated, due to the various factors above. It’s also worth noting radio royalties are just one type of overarching public performance royalty delivered by PROs.
Other performances on television, at restaurants, in live venues, and more are also distributed by the same groups.
Interestingly, the split of the royalties in the US is a little different to the strategy used elsewhere in the world. A songwriter with no publisher will only earn around 50% of royalties, even though the royalties are often split 50/50 between publisher and writer.
Notably, even deceased songwriters and artists can be paid until up to 75 years after their death for broadcast songs on the radio. Of course, artists don’t receive the royalties in the US. The royalties owed to deceased creators are usually paid into the estate of the songwriter.
The publisher’s share, which is usually around 50% of the copyright for many renowned artists, is attached to the publishing company, and can sometimes be resold.
Do radio stations have to pay royalties?
As you can see, while radio stations definitely do have to pay royalties for the songs they play via broadcast, it’s a little more complex than most people would assume. The price of paying for a song on the radio, and how much each radio station pays for each spin can be difficult to get your head around.
It’s particularly difficult to understand the concept of radio royalties in areas like the US, where only the songwriter and publisher will receive anything for giving their name and title to the song in question.
Fortunately, there are definitely other ways for live artists to make money outside of royalties from US radio stations.
In general, radio royalties make up a huge part of how money is distributed in the music landscape, and it’s definitely something worth learning about for anyone with an interest in how the radio landscape really works.