Posts Tagged ‘record label’

IOTW Opinion: Radio Royalties and Record Labels

Ashley Macaulay: Radio Royalties and Record Labels

Conflict between the radio and recording industry has been escalating over new legislation proposing artist and label royalties for radio airplay. The Performance Rights Act calls for radio broadcasters to pay royalties in order to air recorded music, effectively overturning a 70 year copyright standard. If the bill passes, it potentially could force radio stations to pay around $500 million annually, which would be split between artists and record labels.

Supporters of the act claim that artists and labels deserve to be compensated for use of their work, and point out that music publishers are paid for underlying the words and composition of tracks. Sound recordings are considered intellectual property, and radio stations have fundamentally been capitalizing on artists’ and labels’ work for free. Proponents of the act believe that the royalties to artists will support not only their livelihood, but help foster further creativity and motivation. The increased revenue to labels may provide relief to the current losses accrued by falling record sales, and could supply extra income to be spent on artist support and development.

Opponents of the Performance Rights Act point out that the costs of paying royalties to radio could be disastrous. Increased spending and consequent decreased revenue to large stations may result in less spending in important areas, such as community service and outreach programs. Small stations could be forced out of business- especially local and college setups. Furthermore, stations may begin to play less music and revert to talk-shows and advertising to offset the royalty payments and costs. The act may also be detrimental to independent artists, as stations may decide it is less risky and more economical to play acts signed to major labels with an established fan base instead of trying to promote new music.

The advantages and disadvantages of the Performance Rights Act are both strongly defined and pose a wide range of problems. However, I believe that given the nature and custom of copyright law, the act should be implemented. Copyright law exists to protect intellectual property and promote innovation and is based on the idea of compensating creators and owners of work. Given the nature of radio play and the emphasis it places on recordings, I feel it is only natural that copyright law be exercised. Radio companies would simply need to adjust to the cost increase in sound recordings- just as other businesses acclimatize to price changes in factors of production. Business models could be altered and creative new ideas generated to help counteract the effect of the royalty payment, perhaps resulting in greater operational efficiency. In respect to arguments claiming that radios would revert to more talk-based shows to offset costs, I believe that such actions would significantly lower the radio consumer base and would not be highly utilized by stations.

The relationship between radio and the recording industry is reciprocal; radio needs sound recordings to attract listeners and fans and labels utilize radio extensively for artist and album promotion. Which side is “right”? Is the Performance Rights Act fair? Should radio stations be responsible for compensating artists and labels for their work? Are labels and artists wrong in seeking royalties for the airing of recorded music? Is there a better way to handle the issue?

Sources & More Information:
http://news.ecoustics.com/bbs/messages/10381/549087.html
http://www.infozine.com/news/stories/op/storiesView/sid/40285/
http://www.usatoday.com/money/media/2009-10-20-radio-music-royalties-congress_N.htm
http://www.creativedeconstruction.com/2009/06/5-reasons-why-the-performance-rights-act-is-a-bad-idea/
http://arstechnica.com/media/news/2009/08/is-radio-suppressing-pro-performance-rights-act-artists.ars
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Industry Question: Are Music Downloads Hurting or Supporting Artist?

It is incredibly effective for labels to work with blogs and provide the public with an exclusive first listen to new tracks off of upcoming albums. As a consumer, what exactly are you looking for when searching for and receiving this content? Where do you draw the line on what supports the artist and what could be hurting the artist when music downloads are made available to the public?