Radio Royalty Roundtable: Execs Tackle The Issues.

How’s the music industry’s new push to secure a performance royalty from AM/FM airplay playing among broadcasters? Inside Radio caught up with some executives in a virtual roundtable to gauge their reaction.

Has your view of radio paying a performance royalty changed at all over the past few years?

Jonathan Brewster, CEO, Cherry Creek Media: From a practical standpoint, no. Radio continues to deliver widespread free promotion for music while upholding our obligation to serve the public in a way that no other audio medium can.

Bud Walters, president, Cromwell Group: Writers are being paid by radio companies for radio airplay through BMI, ASCAP, SESAC and now GMR. Writers are not being paid much by SoundExchange for streaming. Performers are being paid by radio companies for ‘streaming’ play through SoundExchange. Writers are happy with radio but not happy they are not being paid by SoundExchange. Performers are happy about being paid by SoundExchange, but not for radio airplay. Writers are not happy with performers. Radio is paying both parties. It’s OK to combine the payments and let the writers, artists, publishers, record companies, etc. figure out distribution. Radio is paying a lot to a lot of people at present.

Do you think radio should negotiate with the record labels/music industry or keep up the fight?

Brewster: Since our impact and obligations haven’t substantively changed, we should continue to make the case that performance royalties would be an unwarranted burden for radio.

Larry Fuss, president, South Seas Broadcasting: Keep up the fight.

Walters: The music industry is fighting with itself. Negotiation is always a good thing.

In a world with streaming services, does radio still have the same promotional value as it did in the past?

Brewster: When it comes to promotion we provide, there’s no one that’s even close. We still have roughly the same reach we’ve had for decades. The best stations deliver dynamic programming that provides the promotion and value that everyone in the music industry needs to thrive.

Fuss: Perhaps not, but radio is still extremely valuable for exposing new artists and new music.

Walters: If 93% of the American public listens to local radio every week—the same as the 1960s—then there is substantial promotional value. [Record executive] Clive Davis was recently asked about the promotional value of radio and he is reported to have said ‘it is everything.’

Steve Wexler, VP of Radio, Scripps Radio: Our hallways are filled with ‘thank you’ plaques and pictures from labels and artists. Presumably, they are thanking us for exposing their music and artists to our audiences, which creates demand for their product. While the economics of their business and our business has changed, one thing that hasn’t changed is the power and influence of free, over-the-air radio and its impact on consumer’s interest in music.

Are rising digital expenses reason enough for radio to cut some sort of deal with the music industry?

Brewster: That’s a business decision each operator will need to make. With 53 stations in medium and small markets we benefit most from a united industry front. Any changes in the current system could be catastrophic for many operators and the communities they serve. In addition, it’s certain that there would be further painful cuts and loss of jobs across the industry.

Fuss: No deal.

Walters: Streaming expenses—royalties and streaming costs/platforms—are growing. Whether there is a business model is anyone’s guess. I hope there is.

If you think radio could or should be willing to pay, what percent of revenue sounds about right to you?

Fuss: Zero.

Walters: Five percent total to all copyright holders—including writers, performers, publishers and record companies.

Some think the issue is poisoning radio’s relationship with music industry—do you agree?

Brewster: In a dynamic environment, there will always be friction. Great radio provides the music industry with tremendous value. The better we promote and communicate that value to the music industry and the legislators they’re lobbying, the better off we’ll be. Does that mean we’ll agree? That’s highly unlikely. That said, we can have a professional relationship with everyone if we deal in good faith.

Fuss: Perhaps, but the freewheeling days of the music industry are over. They did it to themselves, but now want radio to pay for their mistakes. Radio stations, especially those in small markets, are faced with an ever-decreasing pool of advertising clients and advertising dollars. Many stations are hanging on by a thread and cannot afford more fees and taxes.

Walters: There is a lot of misinformation within the music industry. Radio is the whipping boy and most in music know it. Everyone wants more money from whatever source they can get it. ‘Performance Royalty’ is merely a PR name for ‘Record Company New Revenue Stream’ as the record companies generally get 50% off the top.

Wexler: We are happy and proud to work closely with our music label partners to expose artists, new and old, on our stations.

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