September 1, 2020

Songwriter Royalties From Radio Airplay About To Take A Beating

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While streaming has done very well during the pandemic, the same can’t be said for radio. Advertising revenue was cut in about half during the second quarter of the year as compared to the same time last year. That means that songwriter royalties for those who have songs that are getting radio airplay will see much lower royalties than they might have anticipated.

Low Revenue And Late Payments

According to an article in Billboard, the largest radio station groups saw advertising revenue drops off as much as 53% in the second quarter compared to the same period last year. Since the amount of songwriter royalties that they pay to performance rights organizations (PROs) is based on advertising, that payout will be less than in previous years. To make matters worse, some stations are attempting to pay the PROs late or even to not pay at all.

The good news is that radio’s revenues bottomed out in April and have been on the rise since. In fact, the outlook for quarter 3 of this year is quite optimistic, although no one is sure if ad revenues will return to their previous levels.

Can This Change The Industry?

This downturn has hit the 8 publicly-held station groups the hardest, and that could mean a big change in the the industry down the road. One prediction (mine) is that the station groups in the United States will fundamentally change by trying to improve their stock position by keeping only the most prosperous stations and spinning off the least profitable ones. This is a great opportunity for radio to go back to local ownership again instead of the way it is now being controlled by centralized program direction.

One of the things that made radio great for music in the past was the fact that just about any station could make a hit that eventually would gain traction across the country. With so many stations automated today, or with jocks having limited playlist choices, this virtually never happens any more.

Chances are if you’re not in the top 1% of all artists then you’re not receiving royalties from radio so this drop won’t affect you much. I could be the dawn of the new era though, as the beginning of when radio finally changed to something more friendly to music.

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