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‘convergence’, ‘new technology’ and ‘digital’ have transformed the radio landscape since 1993 the scale of the commercial radio industry has increased significantly since 1993 (79 stations then, 330 stations now) the revenues of the commercial radio industry have increased significantly since 1993 (£178m then, £598m now) commercial radio licence owners have undergone massive consolidation, enabling significant reduction of costs and increased operating margins (3 groups now control 76% of radio listening) commercial radio stations used to be ‘full service’, but now mostly target a specific music genre or audience demographic the promotional value of commercial radio to music owners has diminished considerably because: o local stations promote little local music, most implementing centralised playlists o local stations use of live music is minimal, marginalising local musicians o many more promotional opportunities exist now for music promotion (music TV, online) o commercial radio has chosen to play significantly less newly released music the business model of commercial radio has changed significantly since 1993 (advertising & sponsorship then; plus online, merchandise, premium phones, station branding now) commercial radio has been slow to monetise its huge listener base and subsequently pays a much lower ‘per user’ rate than online commercial radio is making significantly more use of recorded music than it was in 1993 radio is merely a music ‘distribution’ channel, similar to online commercial radio was a regulated monopoly, whereas it is now part of a wider competitive music landscape listeners now use radio for music ‘consumption’, choosing a genre of specific appeal, whereas commercial radio content used to have to be ‘all things to all people’ listening to radio is increasingly a substitution for music purchase, whereas it used to be a stimulus the BBC increased its music royalty payments significantly in its new PPL agreement (2008), so that commercial radio should now do the same non-analogue commercial stations are not required by their licences to broadcast local content or speech content, and thus can be music jukeboxes payment for music usage is moving towards a ‘consumption’ basis on other platforms and away from shares of revenue commercial radio’s competitors used to be only each other and the BBC, but are now online music providers that pay for music on a ‘usage’ basis digital radio transmission systems provide music at CD-quality, compared to poor quality analogue opportunities exist for consumers to ‘rip’ digital broadcasts and deaggregate music content

Arguments From U.K. Music Copyright Societies (PRS, PPL) For A New Licensing Agreement For The Commercial Radio Industry page 2 ©2009 Grant Goddard

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linear radio transmission has been supplemented by non-linear and interactive forms - listen again, on-demand and podcasts which offer consumers specific content to match their immediate needs PPL and PRS are interested in seeking joint licensing arrangements and joint negotiations commercial radio makes extensive use of mechanical copies of music copyrights which are presently undervalued in payments to MCPS the music reporting burden has been lifted from stations by analysis of Nielsen MusicControl data consistent payment systems should be implemented across different platforms (invoke Joint Online agreement) the assumption of the revenue model was that it had been a good proxy for profit maximisation, but revenue maximisation is no longer the only business objective commercial radio is increasingly moving into the multimedia business geographical barriers are no longer limiting local radio stations to local audiences and advertisers the mid-2009 review of online royalty agreements creates an opportunity to consolidate online and offline platforms together into a single scheme evidence (South Africa) demonstrates that radio airplay reduces the demand for recorded music, which should impact the pricing of music radio royalties new agreements concluded with commercial TV and the BBC (including radio) only leave the commercial radio sector to re-negotiate the removal of anomalies caused by separate Copyright Tribunal decisions is required rate comparisons should be made with current royalty regimes in foreign territories music TV generally pays higher royalty rates than radio, yet both are ‘music jukeboxes’

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at

Arguments From U.K. Music Copyright Societies (PRS, PPL) For A New Licensing Agreement For The Commercial Radio Industry page 3 ©2009 Grant Goddard