US Radio royalty rate row rumbles on

April 2009

Record labels, radio

Traditionally US radio stations, unlike their European counterparts, haven’t had to pay the owners of sound recordings (usually record companies) to play recorded music, arguing that the exposure on radio benefits the recording artists and record labels by stimulating record sales. But moves are afoot to introduce a statutory royalty and Smashing Pumpkins front man Billy Corgan made a rare public appearance in his rock-star-goes-to-Washington suit and tie to face questions by the House Judiciary Committee on Capitol Hill where Corgan spoke out in favor of a bill that would require broadcasters to compensate performers for radio airplay of their songs saying that it was simply unfair that artists, and their labels, received nothing from radio stations which had built their entire businesses around music the labels and artists had, respectively, funded and created adding saying: “I was able to find an audience, in no small measure, because of the long support of my music by terrestrial radio. I am a big fan of radio, and am very interested in its continued health and well being. Terrestrial radio has helped me to discover many of the artists that became influential to my life and artistic pursuits. I by no means see them as the bad guy”.

The moves are, in part, in response to the decline in record sales which, arguably, reduce the persuasive power of the traditional ‘promotional value’ argument used by radio stations. As record sales cease to be the primary revenue stream for record companies and licensing income becomes increasingly important, that ‘promotional value’, although undeniable, becomes, well, less valuable. The Performance Royalty Act, which would introduce a new royalty into a business that  brings in an estimated $16 billion in annual advertising revenue, an inviting target for labels and artists who have seen their income plummet from sales of recorded music. Digital and satellite radio stations in the US already pay a royalty for the use of sound recordings.,0,5463969.story

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