The Elusive Symbiosis: The Impact of Radio on the Record Industry

Abstract:     
Radio broadcasters need not negotiate in a free market with the copyright holders of sound recordings to be able to broadcast those sound recordings on radio. This is unlike television broadcasters, who must negotiate with movie copyright owners before they can broadcast the movies. In some instances (the United States, for instance) radio broadcasters have no obligations whatsoever to the copyright owners of the sound recording (as opposed to the copyright owners of the music). In other instances the radio broadcasters must pay a performance right fee for broadcasting the sound recordings, but these fees are determined by governmental or judicial agencies and need not bear any relationship to what negotiated rates would be. The reason for the weaker copyright protection on sound recordings relative to movies appears to be that radio broadcasters have argued, and it is generally accepted, that radio play benefits record sales and thus there is less need for radio broadcasters to purchase the rights to broadcast the sound recording. This impact of radio play on record sales is commonly referred to as a "symbiotic" relationship between these two industries and is often mentioned by radio broadcasters as a reason for keeping rates low, at hearings to set copyright payments. Yet there appears to be no systematic examination of this relationship. In this paper I present evidence indicating that radio play does not appear to benefit overall record sales. There are obvious implications for copyright since the lack of a symbiotic relationship implies a higher expected negotiated payment for the copyright on sound recordings. I also examine, by way of comparison, television's negative impact on the movie industry.

Keywords: radio, television, sound recordings, records, copyright, internet radio

JEL Classifications: K00, K23, L82, K11, Z10, H41

Working Paper Series