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By Billboard

Music stations bring in 78% of radio advertising revenue and yet only pay out 4% to the performance rights organizations.

The radio industry is getting the better part of its deal with the music industry, according to a presentation by Massarsky Consulting CEO Barry Massarsky at the Association of Independent Music Publishers annual Indie Music Publishing Summit's opening session on Tuesday (June 11).

Massarsky first questioned long-held radio industry claims that it provides promotion for music that drives sales and, nowadays, streaming activity. He observed that when radio used music, 52.9% of the spins are for gold songs, also called oldies or standards. Otherwise, 36.5% of spins are for current music, less than two years old, and the remaining 10.7% spins are for recurrents, or songs that fell off the charts sometime with the last year but are seeing renewed life at radio. Consequently, in light of how much gold songs radio plays, Massarsky says the claims the platform is promoting music that drives sales and streaming activity is over rated.

“So the older the music played by radio gets, the less promotional that play is,” Massarsky said.

Next, Massarsky looked at which formats were driving the $13.47 billion in advertising revenue and found that 78%, or $10.3 million, of that revenue was brought in by music stations, while non-music stations brought in 22% or $3.013 million.

Considering how much revenue is driven by music play, Massarsky decided to look at what percentage of radio's overall expenses are paid to songwriters and publishers. He found that royalties only comprised 4.6% of overall radio expenses. Moreover, in analyzing other industries, he found that HBO's content costs 27.7% of revenue, AMC movie theaters spend 36.5% on expenses and TBS spends 48.5% of its expenses on content -- so at 4.6%, radio had the best bargain for its content costs.

Considering that music stations bring in 78% of radio advertising revenue and yet only pays out 4% or so to the performance rights organizations, the “relationship to content cost is unequal to the value that radio is receiving” from its music licensors, Massarsky said.

Earlier, ABKCO Music COO Alisa Colemen displayed a revenue slide compiled from data supplied by a group of indie music publishers that showed performance revenue is 50% of all music publishing revenue, while synchronization is at 19% and mechanical is at 32%.

But adjusting that revenue for the rates awarded by the Copyright Royalty Board earlier this year, which were retroactive back to Jan. 1, those percentages changed to performance at 49% of music publishing revenue, synch at 18% and mechanical at 33%. (This presupposes that the digital services are not successful in appealing the CRB rates.) Further breaking out the 33% mechanical portion, that breaks out to 8% from physical and other formats; 6% from downloads and 18% from streaming.

Next, Coleman looked at performance revenue and broke that out, finding terrestrial radio accounted for 38% slice of the performance pie; streaming for 34%, television and other for 18% share, satellite radio for an 8% slice and audio/visual streaming at 2%.

Earlier she reminded attendees of the role indie music publishers play in the music industry, noting their importance is measured by their heritage. She said, “It takes real heart to be an independent music publisher.”


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