Promotional effects and the determination of royalty rates for music. Issue 1 (3rd April 2018)

• Record Type: Journal Article
• Authors: Beard, T. Randolph; Ford, George S.; Stern, Michael
• Is Part Of: Journal of media economics. Volume 31:Issue 1/2(2018)
• Page Start: 27
• Page End: 35
• Publication Date: 2018-04-03
• Subjects: Mass media -- Economic aspects -- United States -- Periodicals; Mass media policy -- United States -- Periodicals; 338.4730223
• DOI: 10.1080/08997764.2020.1754227
• Languages: English
• ISSNs: 0899-7764

Abstract

ABSTRACT: When a terrestrial radio station plays a song during its over-the-air broadcast, the artists and their record labels receive no compensation for the sound recording right. Yet radio's digital competitors – including streaming services and satellite radio – do pay performance royalties to performers and their labels for the sound recording. Terrestrial radio's cost-advantage is not the result of marketplace deals or competitive forces, but from a statutory preference granted to radio broadcasters. Legislation aimed at leveling the playing field has been strongly resisted by broadcasters based on the claim that radio provides a promotional effect, or free advertising, for record labels and performers. In this article, we demonstrate that any promotional effect is fully internalized in a marketplace bargain between the music and radio industries. As such, a promotional effect provides no basis for federal law to mandate the free use of music by the radio broadcast industry.