Study: Radio airplay drives music sales

By on Jun, 25 2014 with Comments 0

NAB / National Association of BroadcastersNAB released a commissioned study, conducted by Nielsen, showing a direct correlation between radio airplay and music sales. According to the study, radio airplay is the dominant driver of music sales, beginning with the first week of consistent radio airplay and continuing through the peak sales week.

The new Nielsen study examines how music exposure relates to music consumption, showing a significant relationship between radio airplay and digital song sales. The results indicate that radio is more highly correlated with music sales than any metric studied, which also included satellite radio, music video, on-demand streaming, and programmed streaming services.

“This study highlights clearly the enormous value that radio airplay provides in promoting music and generating music sales,” said NAB Executive Vice President of Communications Dennis Wharton. “Local radio remains the premiere platform for exposing new music and generating sales for record labels.”

The study further concluded that increased radio airplay results in an immediate impact on song sales. In fact, radio continues to support song sales up to and beyond peak sales week, demonstrating radio’s ability to drive song sales and lengthen the lifecycle of a song, according to the study commissioned by NAB.

In conducting the research, Nielsen analyzed data from the top 15 spun songs for all radio and for measured formats from October 29, 2012 to October 27, 2013 using Nielsen SoundScan and Nielsen BDS data.

As things heat up in Congress and the US Copyright office over proposed royalty payments, Francisco Montero, Managing Partner, Fletcher, Heald & Hildreth, P.L.C. noted: “The thicket of different copyright royalty obligations, and who is responsible for paying for what performances, as well as the basic issue of what is a performance, is very complicated.  Radio stations pay publishers and composers (through ASCAP, BMI and SESAC fees) for over-the air broadcast of music but they do not pay the recording industry or the artists for over- the-air broadcast of those recordings.  A fact that record labels have attacked repeatedly for many many years (or at least since the traditional record industry tanked due to the advent of streaming and file sharing) despite the fact that they benefit immensely from radio stations playing their music on the air.  In fact, they benefit so much that they are willing to pay to have their music played on the air….but unfortunately there’s already a word for that, it’s called payola.  If the stations stream a simulcast of their programming over the internet, they do have to pay the record labels (RIAA through fees to SoundExchange) as well as the publishers and composers, unless (possibly) the internet stream is confined to a 150 mile radius (a matter being litigated in Virginia courts).   Meanwhile, the publishers are seeking equitable treatment with the record labels through the Songwriter Equity Act bill introduced in the Senate which would broaden the pool of evidence that Federal rate courts like the Copyright Royalty Board (CRB) and those overseeing ASCAP and BMI may examine when asked to set songwriter compensation.  The worry there is that any perceived inequities will be resolved on the backs of (guess who??) …..the broadcasters.  Meanwhile, streaming services like Pandora are attacking the licensing services for the fees they are being charged and has even bought a radio station in order to be treated like (guess who???)….a broadcaster.  In short, there is appears to be no front lines in this war and the bullets are flying in every direction.  But one thing is certain and that’s that most parties will be looking for ways to force radio broadcasters to pony up more money.  Between activities in Congress, the courts, the CRB and the US Copyright Office, this is turning into a full court press against ….guess who?”

RBR-TVBR observation: If new royalties are imposed on music airplay, the labels will obviously be biting the hand that feeds. Radio stations will simply not play their music because it will no longer be a viable business model. Radio will not suck financial wind like Pandora, et al. Also, operating a terrestrial radio station is much more cost-intensive than streaming a signal over the internet. Radio broadcasters are charged with much more responsibility to their listeners and communities than a streamer or satcaster—and are always liable for fines and license revocations. It’s a completely different animal. If the government were to equalize the costs associated with playing music for all entities, then you might as well say goodbye to music radio. The relationship and model between musicians, labels and publishers is not broken and has worked for almost 100 years. Why try to fix it?

About The Author: Carl has been with RBR-TVBR since 1997 and is currently Managing Director/Senior Editor. Residing in Northern Virginia, he covers the business of broadcasting, advertising, programming, new media and engineering. He’s also done a great deal of interviews for the company and handles our ever-growing stable of bylined columnists.

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