Emails, Dennis Wharton, executive vice president, Communications, National Association of Broadcasters, Nov. 3, 2015

2:57 p.m.

Nov. 3, 2015

Several fact-based points:

Virtually every country in the world besides the U.S. has a state run system of broadcasting. The U.S. is different in that most radio stations are commercially licensed to serve local communities.  

That’s why it is universally acknowledged that the U.S. has the most successful music and broadcast industry in the world.

Mr. Russell’s claim that radio stations “don’t compensate the artists and musicians who make the music” is false.

Local radio stations pay $350 million a year to songwriters when music is played on “terrestrial” (or local) radio stations. We pay another $80 million to performing artists, record labels and songwriters when a local radio station streams music over the Internet. $350 million plus $80 million equals $430 million that local radio stations are paying every year for the privilege of playing music.

Most successful performing artists get songwriting credits, by the way, so they presumably share in the $350 million paid to songwriters.

Because of the unprecedented exposure of local radio airplay (245 million listeners each week, according to the Nielsen ratings service) local radio airplay generates $2.4 billion in record sales annually.

If artists are NOT being fairly compensated (as is suggested by Mr. Russell), the fault lies not with local radio stations, who continue to jump-start careers by playing new and legacy artists every day.

Rather, the fault lies with record labels with whom each artist has signed a contract, and a lack of transparency in how the labels distribute royalties to the artists. (That’s why countless artists – even today – have sued record labels).

Bottom line: Broadcasters sympathize with the music industry, which has seen its revenues sliced in half in the last 10-15 years because of illegal downloading of music and the fact that listeners are buying individual songs for $1.29 from Apple iTunes rather than paying $15 for a CD.

But the answer is not biting the radio hand that feeds the music industry. The Fair Pay, Fair Play bill would funnel hundreds of millions of dollars away from local radio stations into mostly the hands of offshore record labels, and would lead to music-playing radio stations to shift to an all-talk format to avoid paying onerous royalties. Happy to discuss.

Regards, dw

Dennis Wharton

Executive Vice President, Communications

National Association of Broadcasters

From: Selby, Gardner (CMG-Austin)

Sent: Tuesday, November 03, 2015 4:17 PM

To: Wharton, Dennis

Subject: RE: Texas reporter on a fact check about radio performance rights

Is the false part of the claim your point about radio stations paying performers whose songs are streamed?

3:24 p.m.

Yes, that and the fact that most performers have songwriting credits (and therefore share in the $350M terrestrial fees), along with the promotional value of radio.

Promotion translates into increased record sales, which presumably leads to higher fees to performers (unless the labels aren’t sharing in these fees, which seems quite possible).

From: Selby, Gardner (CMG-Austin)

Sent: Tuesday, November 03, 2015 4:28 PM

To: Wharton, Dennis

Subject: RE: Texas reporter on a fact check about radio performance rights

Is it accurate that most countries provide radio performance rights?

3:47 p.m.

I believe that is correct.

We would respectfully make the point that most of those countries have state run broadcasting, and that they are not nearly as successful as the U.S. We believe the reason the music business and the radio business in the U.S. are wildly successful is because local radio stations are not required to pay onerous fees to record labels and performers.

From: Selby, Gardner (CMG-Austin)

Sent: Tuesday, November 03, 2015 4:19 PM

To: Wharton, Dennis

Subject: RE: Texas reporter on a fact check about radio performance rights

Also, can you let me know where these numbers come from?

3:53 p.m.

The $350 million is the aggregate amount of $$$ that radio stations pay to performing rights organizations (ASCAP, BMI, SESAC), who then dole out the $$$ to songwriters (many of whom are performers).

The $80 million in streaming royalties is paid by radio stations to SoundExchange, which in turn distributes the money to performers and record labels. None of that $80 million goes to songwriters.

The $2.4 billion promotional number comes from this study:  http://www.nab.org/documents/newsRoom/pdfs/061008_Dertouzos_Ptax.pdf