Rockonomic: £0.000073 ($0.00012), the value to labels/artists/performers of a spin per Radio listener in the UK

This report is part of a continuing “Rockonomics” series investigating the value of the use of music across a range of experiences — webcasting, radio, streaming services, and CD sales.

In this case, I will estimate the value of a single radio play to a single listener in the UK for only that portion of the royalties that are paid to record labels, featured artists, and performing artists (aka, the neighbouring rights stakeholders).

This estimate is based on inputs including PPL collections from both commercial and BBC radio in the UK, as well as RAJAR estimates of the UK Radio listening audience (i.e., the same estimates used to sell radio advertising in the UK).

Note, while the controversy over streaming services and webcasting usually hinges on the value of a “stream,” the way in which this value is calculated can be quite different from the way in which artists/labels calculate the value of a “spin” on the radio. To re-iterate this difference from a report of mine long ago:

The “spin” value often refers to a radio play experienced by a large audience (sometimes millions of people).

A stream payment usually refers to a play experienced by a single listener online.

Therefore, the goal in this series of “Rockonomics” reports is to estimate the value of a play on the radio according to a similar metric as that applied to online sources, such as streaming services and webcasting.

The Short Story

I estimate the value of a single radio “spin” to a single listener in the UK to be £0.000073 (or $0.00012). Alternatively stated, the value of a “spin” to an audience of 1,000,000 listeners is about £73 (or $120).

Note that if I estimate this “spin per listener” value according to an alternative method I have employed in the past, I get £0.000076 (or $0.00012), a convergence between methods that quite frankly freaks me out.

This estimate is a function of three primary ingredients:

  1. the total 2011 Broadcast and Online collections of PPL, adjusted for that proportion of those collections that likely derives from Radio rather than TV, Cable, Satellite, or Internet sources;
  2. RAJAR’s measures for the size of the radio listening audience in the UK, adjusted for that proportion of the audience likely focused on Talk radio; and
  3. an assumption of approximately 12 songs being played per hour on music radio in the UK.

For comparison, I believe the value estimated above is 1/36th the rate reported by Zoe Keating ($0.0042) for her receipts from streaming music services (e.g., Spotify), 1/10th the rate ($0.0011) paid by Pureplay Webcasters in the US (e.g., Pandora), and 1/18th the CRB-established default Webcaster rate ($0.0021) in the US.

The Long Story

[coming soon]

 

 

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4 Comments

  1. Interesting to see UK copyrights costs cited in the US. These are the facts ….

    UK broadcast radio paid £2.25 per 1000 hours listened for music copyright in 2011. A ‘small webcaster’ in the UK paid £15 to £23 per 1000 hours listened (the exact amount depends upon the number of songs played per hour). It should be noted that UK commercial radio earned revenues of £22 per 1000 hours listened in 2011. That yield was achieved after 40 years of the sector’s existence and huge expenditure on marketing campaigns. How is a nascent industry like online radio expected to afford, in music copyright fees alone, as much money as the commercial radio sector earns in revenues?

    There is no level playing field between terrestrial radio and online radio in the UK. Indeed, the Copyright Tribunal that set the PRS online music royalty rates understood that the rates were “approximately six times those under the commercial radio agreement” because “commercial radio offered quite a different service to ‘music, music, music.'” [Declaration of interest: I worked for a year preparing evidence for that Tribunal and these quotes are from the Tribunal Decision.]

    The detailed numbers and the Tribunal’s reasonings are in a presentation ‘Online radio: the UK business model’ I made at a Music 4.5 conference in London this September. View it at http://www.scribd.com/doc/107099932

    If anyone has questions about UK music copyright costs, contact me. The precise figures are different between the US and UK, but the inequalities between broadcast radio and online radio are just as serious.

    Grant Goddard
    radio analyst
    London

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