Taking Policy Into My Own Hands

This week I was asked to put myself in the shoes of a CEO at a major label and choose a policy/issue in the music industry I’d want to change and for me changing the unjust radio business structure was a no brainer. Read my discussion and thoughts down below and please feel free to comment!

As a CEO of a label under one of the three major label parent companies who are pressuring me for a more solid revenue stream, I’d look to terrestrial radio for sure. There is so much that can be changed in the radio space and I would want to collaborate with the radio companies and possibly DSPs to see what we could come up with together. Radio is an interesting service because they do not make any money from their listeners however, they do benefit from having these listeners as a selling point to advertisers and they have these listeners because of the incredible artists they play on their radio stations and thus have advertising sales because of the artists.

Why can’t radio learn from DSPs like Spotify and take their advertising funds and use that to properly pay artists? Some may say that they can’t afford it because they don’t have paid subscribers like DSPs do. This is true but in 2018 radio stations earned about $797 million in revenue from advertising (Statista | Radio local digital advertising revenue in the United States). That is a lot of money that these radio stations could be and should be allocating for artist royalty payments. The reason that radio has not been required by law to pay out these royalties is that when music plays on the radio it improves record sales. That doesn’t apply anymore. If one car is playing a song on the radio and another car is playing that same song on Spotify, the artist should deserve to be paid for both occurrences not just one.

To solve this issue, I would set up meetings with DSPs to talk to them about how they budget and allocate royalties for artists and then I would set up meetings with policy makers and stakeholders in DC and educate them on this issue, and finally set up meetings with radio companies and educate them on how it is possible to allocate and budget for royalty rates. These meetings would not happen overnight and they certainly would not be easy but if a DSP like Spotify can pay artist royalty rates with an annual revenue stream of “$4.99 billion” (Investopedia) and radio makes an annual revenue of “$13.87 billion” (RadioWorld), radio companies can afford the royalty payments.

These changes will all hopefully happen because of the education and awareness that the Music Modernization Act has brought to the Music Industry and Music Policy makers. Because the MMA and its stakeholders are already advocating that “the unclaimed royalties [should be put] in the hands of the content community, rather than sitting with the DSPs,” there should be no problem advocating for proper royalties being paid to artist played on the radio. By partnering with the policy makers who created and successfully launched the Music Modernization Act, I could construct a solid plan and policy for the Modernization of Radio Royalty Payments. Once the policy revision is constructed I would need to make sure it makes sense legally and I would hire an attorney to review and edit the policy revision. If the policy revision is all set and ready to launch, I’d partner with large music companies like the three majors, the Recording Academy, the Future of Music Coalition, artists themselves, and whoever else would want to join the fight.

Once the campaign is out there and there are advocates for this policy change, I’d plan to go straight to DC with the proposal as well as the radio companies. Because the policy revision would include a breakdown of how DSPs pay their artists’ royalty rates, there should be very little arguments about how feasible the change is. It is absolutely feasible and should not be ignored with the large amount of advocates backing the change. Depending on the radio companies’ reactions I’d partner with my fellow advocates at the major labels and ask them if they’d boycott radio companies and prevent them from streaming their music until they comply with the proposed policy. This strategy is extreme however, it would absolutely work and provide the radio companies with a great sense of how valuable artists really are to their companies and therefore help them realize they deserves financial compensation for their work.

If radio stations do decide to move forward with the proposed policy revision that me and my team formed, then it would be an extreme success and win for the music industry as a whole. Radio companies used to claim that radio plays promoted album sales however, those sales are just not happening anymore and if a radio company plays an artist’s song for free while DSPs have to pay, it makes no sense and is completely unjust. Someday I hope to witness this change and if it does happen, I will be on the frontlines just as I was for the MMA.

Pat Timmons