How much is a radio airplay worth?

It is a great question, and actually not very easy to answer. The economic value of a radio airplay varies a lot, depending on the size and type of the radio station as well as the country. In this article I’m going to try and? give you a bit more? perspective? on the value of radio, both from an economical and data point of view.

Context

In the European Union there are more than 250 Collective Management Organisations (known as CMOs) However a majority of these are quite small, so we should focus on the 70 biggest CMOs, which?are in charge of collecting and distributing €6 billion annually, on behalf of about 1 million rights holders.

First and foremost, payments and claims are set up differently from country to country. In the UK there are the Performing Right Society (known as PRS) on behalf of the performing rights, and the Phonographic Performance Limited (known as PPL) on the neighbouring rights side, In Denmark the main entities representing these organisations are KODA and Gramex, and in Germany they have GEMA and GVL. Most countries in the western world has an organisation for both rights sides, however there are four countries in the world that have decided not to collect and pay neighbouring rights from radio:?North Korea, Iran, China, and the United States of America. The main reason why this has been decided in the US, is that one expect the promotional value of being played in the radio should be worth enough for the artist or record label. The biggest organisations in the American recorded music industry RIAA and A2IM has been fighting for neighbouring rights on behalf of their members, for a long time.

Myths about radio

1. “Radios don’t pay rights-holders”

False (at least not entirely true). Indeed, radio stations require to have a broadcast licence and agreement with their local CMO to operate. However, not all radios actually have an agreement, and it is up to? the CMO to decide on the type of agreement and licence the radio station requires. This is usually based on whether the radio is broadcasting via FM, DAB or exclusively online. There are usually 3 different methods CMOs use to distribute money from radios. (1) Pay-per-play. This method means that the actual airplay of the song on this radio is reported, thus it will have a value based on the size of the audience the radio reaches. An airplay on BBC2 on the performing rights side is approximately 22 GBP per minute, so considering a 3-minute duration of an average song, this could be translated into 66 GBP, that’s just under 90 USD per radio airplay. The BBC2 is the channel that pays the most for a radio airplay, even the more well known BBC1 only pays about half of BBC2.

“Representative samples'' This term mean that sample tests are used to determine which songs will get paid. In Denmark the CMOs do a sample test twice a year, for one week each. This means that if your songs are not played during these 14 specific days, you will?not get paid anything. However if your songs are played in the sample period, you will get paid quite a lot, as you are paid based on the whole year. This model is bad for independents who does not individually have a big representation, meaning their chance of being part of the sample test is small. For the majors however, this is actually a pretty good model as they have a big representation and catalogue, thus their chances of being part of the sample test period is much bigger.

It appears that across the best CMOs in Europe, only 15-20% of radios use a pay-per-play method. As an example: in the UK, PRS have a “pay-per-play” rate attached to only 200 radio stations; although at WARM [World Airplay Radio Monitor], in this same region currently monitor almost?1200 radio stations.

“Research and analogy” This is basically a method where the CMOs look at other sources to determine which songs are the most likely to get significant radio airplay. This could include streaming data and music played during public performances for example.

CMOs expect a song to perform as well on radio as it did on Spotify for instance, but? this method is completely wrong because it does not take into account the fact that small independent radio stations will not be playing international hits like other commercial radio stations. The smaller the radio, the more independent mindset among the curators.

2. “My CMO is aware of every airplay my song gets , that’s why I pay them, right?”

Unfortunately, no. Most CMOs do not have a broad and global radio monitoring system attached to their repertoire. This usually comes as a big surprise to many rights holders. The CMO's mainly focus on getting reporting from local national radios, or use the different methods explained earlier. The CMO's basically say that what is being played on smaller (independent) radios is not worth enough to setup an actual "per play" reporting.

In regards to collecting between countries, the CMOs have a reciprocal agreement on reporting radio airplay to each other. However as some CMO's are much worse than others it creates an issue that they are expected to trust each other.

3. “Nobody listens to radio” and “My music is not radio friendly anyway”

We often hear that radio is not relevant anymore, and that everyone streams music. I agree that streaming is a large representative of music consumption nowadays, however radio is still the format with the biggest reach for music consumption worldwide. According to Statista, 47% of Europeans listen to radio daily, and in the US, 89% of people over 12 years old listen to radio weekly. During Covid, BBC and Bauer media reported an increase of music consumption via radio of 15%. Radio is here to stay and will most likely continue to play? a big part in many artists’ careers. It's also worth to mention that a stream usually only has one listener, where a radioplay usually has many listeners.

Based on audience data from Rajar, it’s reported that a radio spin on BBC2 has an audience reach of just under 15 million people, that’s about 22% of the UK population. Even Jazz FM, has reportedly more than 400.000 listeners, whom I bet predominantly are jazz fans. Imagine if your jazz record is being played for that many jazz fans on a specialized jazz station - that is extremely well-targeted promotion. The same goes for Electronic music, Rock, and Hip Hop. There are specialized radio stations for all genres, it’s just about finding them. ?

The Market intelligence value

Other than its monetary value, radio also provides great insights into an artist’s audience - also known as market intelligence value.?

In regards to global radio data, market intelligence can be extremely useful to an independent artist, manager or record label. Thanks to WARM for instance,?it is now possible to gather radio airplay data about any given song, in real-time!?What can one do when they know exactly when, where, and for how long a song was played on the radio? They can optimize their marketing strategy, radio promotion campaigns, identify an artist’s fanbase, and locate specialised radios around the world?which are supporting the artist’s song, or even similar music. With WARM anyone can monitor any song across radio all over the world, thus identify exactly which radios is most likely to play your music, based on monitoring other similar songs.

Moreover, you are able to benchmark radio data with streaming data segmented by cities and countries. By doing so, one could highly improve decision making about touring strategies and marketing efforts, and by so prioritise where to spend their energy and time.

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