It is a great question, and actually not very easy to answer. The economic value of a radio airplay varies a lot, depending on the size and type of the radio station as well as the country. In this article I’m going to try and give you a bit more perspective on the value of radio, both from an economical and data point of view.
In the European Union there are more than 250 Collective Management Organisations (known as CMOs). However a majority of these are quite small, so I’ll focus on the 70 biggest CMOs, which are in charge of collecting the biggest part of €6 billion, on behalf of about 1 million rights holders.
First and foremost, payments and claims are set up differently from country to country. In the UK there are the Performing Right Society (known as PRS) on one side and Phonographic Performance Limited (known as PPL) on the Neighbouring rights side. In Denmark the main entities representing these organisations are KODA and Gramex, and in Germany they have GEMA and GVL.
To simplify it, on one side you have the publishers, composers and writers of a song, and on the other side you have the record labels, artists and performers (neighbouring rights), as both the composition and the actual recording is used when a song is played on the radio, it makes a lot of sense that both sides earns royalties.
In most countries there are two sides of musical rights: performing rights and neighbouring rights where musicians earn royalties from radio, however there are four countries in the world that have decided not to pay neighbouring rights from radio, North Korea, Iran, China, and the United States of America.
False (at least not entirely true). Indeed, radio stations require to have a broadcast licence and agreement with their local CMO to operate. However, not all radios actually have an agreement, and it is up to the CMO to decide on the type of agreement and licence the radio station will have. This is usually based on whether the radio is broadcasting via FM, DAB or exclusively online. There are usually 3 different methods CMOs use to distribute money from radios. (1) Pay-per-play. This method means that the actual airplay of the song on this radio is reported, thus it will have a value based on the size of the audience the radio reaches. An airplay on BBC2 on the publishing side is approximately 22 GBP per minute, so considering a 3-minute duration of the reproduction of an average song, this could be translated into 66 GBP, that’s just under 90 USD per radio airplay. Contrary, on BBC1 a radio airplay is worth roughly 50% of the latter.
These terms mean that sample tests are used to determine which songs will get paid royalties. In Denmark the CMOs do a sample test twice a year, for one week each. This means that if your songs are not played during these 14 specific days, you will not get paid.
It appears that across the best CMOs in Europe, only 15-20% of radios use a pay-per-play method. As an example: in the UK, PRS have a “pay-per-play” rate attached to only 200 radio stations; although at WARM [World Airplay Radio Monitor], in this same region, we currently monitor almost 1200 radio stations.
This is basically a method where the CMOs look at other sources to determine which songs are the most likely to get significant radio airplay. This could include streaming data and music played during public performances for example.
CMOs expect a song to perform as well on radio as it did on Spotify for instance, but this method is completely wrong because it does not take into account the fact that small independent radio stations will not be playing international hits like other commercial radio stations.
Unfortunately, no. Most CMOs do not have a broad and global radio monitoring system attached to their repertoire. This usually comes as a big surprise to many rights holders. They mainly focus on getting reporting from local national radios.
CMOs have a reciprocal agreement on reporting radio airplay to each other.
Unfortunately, this is not an optimal practice. When a CMO reports radio airplay to another CMO, they are basically sending money out of the country, this is obviously not in their best interest from a national perspective. There are however great CMOs, however these are forced to trust really bad CMOs, regarding reporting from f.ex radio.
We often hear that radio is not relevant anymore, and that everyone streams music. I totally agree, streaming is representative of music consumption nowadays, however radio is still the format with the biggest reach for music consumption worldwide. According to Statista, 47% of Europeans listen to radio daily, and in the US, 89% of people over 12 years old listen to radio weekly. During Covid, BBC and Bauer media reported an increase of music consumption via radio of 15%. Radio is here to stay and will most likely continue to play a big part in many artists’ careers.
Based on audience data from Rajar, it’s reported that a radio spin on BBC2 has an audience reach of just under 15 million listeners, that’s about 22% of the UK population. Even Jazz FM, has reportedly more than 400.000 listeners, whom I bet predominantly are jazz fans. Imagine if your jazz record is being played for that many jazz fans on a specialised jazz station. The same goes for Electronic music, Rock, and Hip Hop. There are specialised radio stations for all genres, it’s just about finding them.
Other than its monetary value, radio also provides great insights into an artist’s audience - also known as market intelligence value.
In regards to global radio data, market intelligence can be extremely useful to an independent artist, manager or record label. Thanks to WARM for instance, it is now possible to gather radio airplay data about any given song, in real-time! What can one do when they know exactly when, where, and for how long a song was played on the radio? They can optimise their marketing strategies, radio promotion campaigns, identify an artist’s fanbase, and locate specialised radios around the world which are supporting the artist’s song.
Moreover, you are able to benchmark radio data with streaming data segmented by cities and countries. By doing so, one could highly improve decision-making about touring strategies and marketing efforts.