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SoundExchange CEO: Radio ruins record sales

michael huppe 300wIn a punchy keynote address at the New Music Seminar in New York yesterday, SoundExchange CEO Michael Huppe provocatively claimed that music sales decrease when radio plays songs, according to a Billboard report. Huppe used that theme to support an argument that broadcast radio should be required to pay performance royalties to artists and labels, from which radio is currently exempt in U.S. music licensing regulations.

SoundExchange is the collection and distribution agency for royalty payments to rights-holders of music recordings.

That question — whether terrestrial radio should pay music royalties in the same way as online radio does — is heating up. The House Judiciary Committee is holding two music-licensing hearings this month to discuss that question, and related copyright issues. The U.S. is unique among Western nations in exempting broadcast radio from performance royalties for the recordings it uses. (Online streams of terrestrial stations do pay performance royalties, as pureplay Internet stations do.)

In addition to citing historical studies of radio’s purported effectiveness as a sales-promotion medium, Huppe described the star-breaking power of online music services in launching the careers of Lorde and Daft Punk. both those acts broke into mainstream awareness from online listening platforms and social media. “That is what’s upside down, when Lorde and Daft Punk demonstrated that people want to hear their songs, FM radio decided to broadcast their music to millions of people for free without paying artists and labels anything at all,” Huppe is quoted in Billboard.

In the debate over music licensing regulation which is happening across many venues at once, the National Association of Broadcasters (NAB) argues publicly against Huppe’s point, and has publicized a majority-backed, non-binding resolution in the U.S. House of Representatives, which supports radio’s exemption from performance royalties. The NAB has also characterized broadcast radio as a nationwide network of small businesses that provide local value to their communities. In short, the NAB promotes the status quo of an arrangement that benefits business, community, and public welfare.

The uneven playing field underlying the broadcast and Internet radio industries is increasingly under discussion this year, when the U.S. government is reviewing how music is licensed generally, whether from artists and labels, or songwriters and publishers. Huppe’s keynote remarks seemed designed to be sharply controversial, garnering attention to SoundExchange’s mission to increase payments to artists.

 

Brad Hill

6 Comments

  1. Isn’t SoundExchange supposed to be in the business of just collecting royalties? They shouldn’t be lobbying for political change. They were created by DMCA to collect royalties, not to lobby for more royalties.

  2. So record company promotion people have stopped contacting radio station music and program directors? I think not.

  3. This is man is a blatant puppet for RIAA and their sheer determination to put a strange hold radio……..whether it be online or terrestrial…………..Ask any artist striving to get attention to their music

  4. I think SX’s mission is to increased payments to the labels, not to artists. The claim that radio airplay HURTS music sales is fatuous. Radio should call his bluff and ignore some big releases in key markets.

  5. Daft Punk has been having small hits for years, the most notable was ‘Around the World’ which hit long before Pandora, iHeartRadio, and many others even existed on the Internet.

    The reason terrestrial radio fails to sell records is because radio is playing basically the ‘same old crap’, so listeners turn elsewhere to find better music, and more variety than OTA radio can, so listeners are now spurning what is heard on OTA radio in favor of buying what they hear online.

    Pandora, Accuradio, and others make purchasing new music possible. OTA radio can’t do that, unless they promote the heck out of HD Radio and the iTunes Tagging feature

    This does in a way also reming me of the time in 1974 where they were serving tacos at a school cafeteria, and I was in the line outside the door, and a girl ran out of the cafeteria yelling ‘I’m not eating, they’re having [crap]’. I got in there, had the tacos, it was that bad textured stuff, two weeks later though, they used a different taco filling, one that was more like what we were used to when it came to those, this was in Tucson Arizona.

    So, unless OTA radio can come up with innovations in formats and start playing more new music and a bigger variety of artists and genres and styles, they are not going to help their cause any, and in fact some have said that if SoundExchange gets its way, they may flip their formats to talk.

  6. I guess it is time to start invoicing the record labels for the promotional value of each spin and for the time for each call from their representatives trying to get me to play one of their releases. I should also bill them for storage and handling of the mountains of CD’s they send unsolicited and for each email asking me to play such CD’s.

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