Monday, March 16, 2009

How do you compete with free?

To continue on with my last two posts, I have a question for you: How do you compete with free? That is a common question posed by many in the recording industry. The question is usually given in the context of the ravages of digital technology on music sales. While I think this is an overly simplistic question, I am posing it regarding radio.

That's right, over-the-air terrestrial radio. Our prized AM/FM radio. I'm currently reviewing some of the testimony given to congress recently. Professor Ashbel Smith from the University of Texas at Dallas makes some very good points in his statement before the Committee on the Judiciary regarding the Performance Rights Act.

One such result of his research is that if people are listening to free music on the radio, they are not listening to prerecorded music ... seems like a no-brainer. I'd like to say he has a wonderful grasp of the obvious, but it is gospel in the music industry that radio airplay drives music sales. So if that is the longstanding industry belief, that radio airplay drives sales, why do we believe this? I'll admit that radio air play can drive up the sales of a single song or album, but does it actually increase overall record sales? That is the important question, the question that Professor Smith addresses in his statement.

It is an interesting idea that radio airplay actually hinders the sale of prerecorded music instead of promoting it. What do you think? Answer the survey at the right to weigh in on the debate.


  1. The answer to this question is very genre-specific. For country and urban music, I have observed that radio airplay does directly affect sales, as a hit song can and usually does increases sales of that song (and hopefully album). I'm not as sure how effective radio aids sales in other genres, especially more niche specific ones.

    How about the rise of free Internet radio listening and availability such as Pandora?

  2. Levi,

    Thanks for the comment. I agree with your analysis on the individual song or artist level.

    The point I was trying to make, however, is that while radio airplay can generate sales for a specific song or album (the airplay of the song "Name" by the Goo Goo Dolls is the perfect example of radio airplay creating stars), it does not generate greater sales for prerecorded music as a whole.

    In other words, if radio discontinued playing music altogether, would the the sale of prerecorded music rise or fall? Dr. Ashbel argues--and I agree--that without free music on the radio, more people would purchase prerecorded music, thereby drastically increasing the sale of total units of music as a whole.

  3. Levi,

    I forgot to address your question about free internet radio such as Pandora. Pandora is only free to the listener. Unlike AM/FM radio, digital radio such as Pandora and Last.FM, just to name a few, pay royalties to the performers.