1. Research how music royalties work to learn more about the cost and pricing of music. Write a report of what you learned.
2. Should artists and record labels be paid royalties every time their music is played? What type of cost does this represent for a radio station?
Country music stars such as Taylor Swift, Rascal Flatts, and Tim McGraw will be the first artists to be paid every time their songs are played on the radio. In the United States, only songwriters and music publishers receive royalties from radio airplay or when a song is played in a movie, television program, commercial, or even as hold music on telephones. This dates back to a 1917 Supreme Court ruling that composers of copyrighted music are due a royalty every time the music is played or performed through commercial means. But performing artists or recording companies do not receive such royalties. The rationale is that radio play promotes record sales, where the artists earn royalties ranging from 8 to 25 percent of the price of a CD. But thanks to the Internet and music download sites such as iTunes, sales of traditional recorded music have dropped almost 50 percent. In 2011, digital music sales surpassed traditional CD sales. Listeners have also tuned in to Internet sites such as Pandora, Spotify, and Rdio to listen to music. Recording artists did get some relief through the Digital Performance Rights in Sound Recording Act of 1995. The act gave performers their first royalties when their songs are played in a digital format, such as in a Webcast or on satellite radio, where listeners subscribe but cannot select specific songs. Pandora, the online radio company, claims that such royalty payments, equivalent to about 60 percent of revenues, are the reason the company is unprofitable.