BMI: Radio's Influence On Music Has Eroded

Broadcast Music Inc. (BMI) has asked a federal court in New York to hike what radio stations pay for licensing music in its repertoire. Not only does the performance rights organization call its proposed rate hike “reasonable” but it said during the past six years there has been “erosion” in the promotional value of broadcast radio, which it blames for a decline in overall music sales, reports InsideRadio.

“Radio broadcasts no longer drive music sales, once a critical revenue source for BMI’s affiliates and a factor long considered a justification for lower rates payable to BMI,” it said in a filing in a New York federal court. It notes album sales declined 18% in 2017 while on-demand audio streams of single songs grew 59% over the same period. “In light of these changes, publishers can no longer rely on royalties from album sales to capture the full value of their copyrighted works,” BMI told the court.

BMI’s contention flies in the face of research from Nielsen, whose Music 360 report found the top source for music discovery is AM/FM “Over-the-Air” radio, with 49% of listeners saying this is where they turn for new music.

At the same time, BMI also said there has been “explosive growth” in digital streaming and HD Radio multicasts using its catalog of music. By BMI’s count more than 3,200 stations are streaming—a 48% increase during the past five years. “As a result of streaming and multicasting, overall music use by radio stations, including of music in the BMI repertoire, has increased dramatically,” it said, adding, “it is expected to continue to increase going forward.”

The frontal attack on radio’s promotional role comes in a filing in response to the Radio Music License Committee’s petition last week asking Judge Louis Stanton to begin the formal rate court proceeding after the two sides were unable to reach a new licensing deal for radio stations after more than a year of negotiations. BMI has proposed hiking the revenue rate to 2% for the new term, from the 1.7% revenue rate that stations had been paying under the industry’s previous deal—and raising it to 2.5% for online music use.

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