What You Didn't Know About Radio Royalties

Here’s a little quiz: What (and when) was the first musical broadcast via radio?

Many historians trace it back to 9pm on Christmas Eve, 1906, when Reginald Fessenden used a handmade transmitter to broadcast from Brant Rock, Massachusetts. Those lucky enough to tune in—a few nearby ships at sea—heard Fessenden playing “O Holy Night,” a Christmas carol composed by Adolphe Adam in 1847, on the violin and reading a passage from the Bible.

No points off if you missed that one, but don’t miss this next one: Who got paid? 

Actually that’s a trick question, as the institution of performance royalties was still decades away, but it most certainly would not have been Fessenden, even with his ground-breaking transmission. 

Let’s cut through a few of the myths and misconceptions surrounding radio royalties. Ideally, it’ll be your songs getting played on the radio someday, and we want you to be prepared.

Radio Royalties: Who Gets Paid and Why?

When a song gets played on terrestrial radio—that just means “traditional” FM and AM broadcast as opposed to satellite radio—the songwriters are paid through whichever performing rights organization (PRO) they’re affiliated with, such as ASCAP or BMI in the US, or collective management organization (CMO) in their country or territory. These royalties are typically paid under a “blanket license,” which allows radio stations to broadcast a wide range of works from a given publisher’s catalog for a lower rate than would be paid on a song-by-song basis.  

Performing artists and master recording owners do not receive royalties for broadcast radio in the United States, which is true of only a handful of other countries - everywhere else, broadcast radio pays songwriters, master owners, and recording artists to use their music. Why does the US handle things this way?

When regular broadcasting began in the US in the early 1920s, music represented a relatively small share of airtime, and there was no provision to pay performance royalties to recording artists. By the time radio stations playing “Top 40” began to proliferate—the first to adopt the format was WLNO, in early 1955 in New Orleans—the recording and radio industries had developed a largely symbiotic relationship, and labels were leery of displeasing radio executives by demanding they pay recording artists.

Radio Royalties: Hope for Greater Equity?

Although terrestrial radio is increasingly being sidelined by satellite, digital and other broadcast formats, it’s still a primary way that music is heard around the world. Hoping to change the legal paradigm, a group of industry leaders and legislators worked to incorporate a bill entitled the Fair Play Fair Pay into the landmark Music Modernization Act of 2018. They were ultimately unsuccessful, but a unique organization called SoundExchange is making some headway in this area.

SoundExchange is a premier digital performance rights organization, but don’t confuse the “performance rights organization” part as being the same as a performing rights organization (PRO). They differ from ASCAP and BMI in that SoundExchange represents artists and labels as opposed to songwriters and publishers. By focusing on the digital radio market, SoundExchange collects digital performance royalties for certain “non-interactive” music services, as well as satellite radio airplay; “non-interactive” essentially, replicates the terrestrial radio format because you aren’t choosing what you listen to. 

In addition, SoundExchange collects fees on behalf of artists in many of the foreign markets which provide for performance royalties through reciprocal deals. As the US does not yet have an overarching legal framework to provide such royalties to performers, it's important for creators to know about this distinction and register their songs with the appropriate organizations to make sure they collect what is owed. 

We sincerely hope you come away from this article with a deeper and more nuanced understanding of how radio royalties work (and how they don’t). And most of all, we hope your songwriting efforts end up on the radio, or anywhere else you can be paid for your work. If you want to talk further about that goal, you know how to reach us.

Access what you’re due.