Read an article about the economics of streaming internet radio, which made me wonder about how old fashion, regular, broadcast radio works:
Radio stations broadcast music written and performed by other people. I presume they need permission to do this, and that in return for permission the artists want money. What form does this take: Do they get paid per-play?, does the number of people reached by the broadcast factor into it?, are the artists paid out individually or does the radio station just send some set fee to an umbrella group which divies it out from there? How much money do artists actually get from radio-play?
In the United States, terrestrial radio stations pay only the composers (songwriters) of the songs they play. They do not pay the performers or record companies (unless they also own the publishing rights to the songs).
Most songwriters sell their rights to publishing companies. The publishing companies are represented by agencies such as ASCAP, BMI, and SESAC. Radio stations buy licenses from ASCAP, BMI, and SESAC that gives the radio stations rights to broadcast all the songs in their respective catalogs. For a commercial station, the license is usually a percentage of the station’s revenue.
Satellite and internet broadcasters also have to pay royalties to the performers. Performers sign up with SoundExchange to collect their royalties for them.
ASCAP’s website makes it sound easy for the radio stations. They just pay a blanket license, and they’re able to play any of the 8.5 million songs licensed through them, but no mention of how that gets distilled down to individual artists, composers, etc.
You’ll note that The American Society of Composers, Authors and Publishers (or ASCAP) represents only composers, authors, and publishers and collects royalties only on behalf of these three groups. It does not represent recording artists or record companies.
And the music represented by BMI and SESAC is not insignificant. In practice, a US radio station is going to have to pay a tithe to all three.
So why are the composers paid, instead of the artists? I thought musical copyrights only applied to the performance of a piece, rather than the original composition?
Stations keep logs of all the songs they play and send them to ASCAP, which tabulates them and divvys up the royalties according to how often they’re paid. For a hit single, the numbers add to to a nice chunk of change. I believe there’s a threshold – if a song is only played a couple of times during a reporting period, it’s not enough to trigger payment.