October 16, 2024
Episode

How Radio Still Shapes the Modern Music Industry

How Radio Still Shapes the Modern Music Industry
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This week’s episode and memo is a deep dive into why radio still matters. The long-standing audio format is still a massive, multibillion-dollar industry. Despite the slow decline, today’s industry can learn a lot from the legacy business. To break it down, I was joined by Tati Cirisano from MiDIA Research.

You can listen to the episode here or read a few highlights below.

The nine lives of terrestrial radio

Radio is the least sexy medium in entertainment. By far. It’s your uncle’s grey 1994 Honda Accord EX with over 250,000 miles. Will it last another 250,000 miles? Unlikely, but you know your uncle. He wants to run that thing into the ground. His car can’t connect to a smartphone, and the power windows take way too long to wind up. That stain on the right backseat is there for good. But the reliable no-frills vehicle can live on with regular maintenance.

The decline of radio is real though. Ad revenue and listenership continue to shrink. But radio’s decay is not as steep as other mediums. CNBC recently shared Pew Research data on the percentage of Americans who listened to radio, which fell 10% from 2009 to 2022. Meanwhile, broadcast TV primetime viewership dropped 20% from 2014 to 2019 alone. That decline is even steeper for cable and satellite TV.

The format lives on for two reasons: radio’s low-cost structure, and its quality compared to newer alternatives. First, radio is cheap to produce. If the revenue from advertisers offsets the cost to run the station, then there’s profit. That revenue is declining, but many stations use the station as a loss leader for more lucrative concerts and events. A station like New York’s Z100 still generated over $30 million in 2022.

Second, radio is still an audio product that can match the quality of newer alternatives. NPR’s This American Life has set a quality benchmark that most well-funded storytelling podcasts still aspire to. The audio quality gap is much smaller than it is in video, where an HBO Sunday night drama is often better quality than a primetime series on ABC.

And despite radio’s perception of passive listening, the format can tell us a lot about nurturing superfans. Radio engages its active listeners through free concert ticket giveaways for its station-run concerts like Jingle Ball and Summer Jam. The radio DJs and personalities have established a parasocial relationship with listeners. Voices like Delilah, Funkmaster Flex, Angie Martinez, and Rickey Smiley have made their impact. Every locale has its voice. As iHeartMedia CEO Bob Pittman often says, Radio is in the business of selling companionship.

You can listen to the episode here or read below for more highlights.

The compensation debate

The U.S. is the only country that doesn’t pay recording artists or performers for songs that get played on the radio. The songwriters and publishers get paid through PROs, but not the singers. This has been an ongoing debate for decades. Lobbyists from the National Association of Broadcasters want to maintain the status quo. They often base their argument on the Copyright Act of 1909. 1909!

Back then, the music was monetized by selling sheet music. There was no “music industry.” Even a Copyright Act of 2009 would be outdated by now, let alone 1909. The Copyright Act of 1909 was signed into power by President Teddy Roosevelt. These “speak softly and carry a big stick” laws have to get with the times.

U.S. Senators Alex Padilla (D – CA) and Marsha Blackburn (R – TN) are pushing new legislation to get recording artists paid from radio station revenue. Their proposals are modest, but it’s an argument that may fall on deaf ears (literally) given layoffs at iHeartMedia, Audacy’s Chapter 11 bankruptcy filing, and the continued decline in ad revenue.

Both streaming and internet radio taught us a lot about the court of public opinion and its influence on music legislation. The brand-new sexy toy that doesn’t pay its fair share can easily be painted as the enemy of the people. Pandora and Spotify know that all too well. But painting that ‘1994 Honda Accord’ as the enemy of the people is tougher, even if it’s warranted.

It’s easier to rally public support against a pre-IPO unicorn than a radio industry that relies on laws that were put in place when Harriet Tubman was still alive.

The nine lives of payola

Payola is an illegal practice that has been outlawed since 1960, but the act of paying for radio airplay without disclosing the payment has lived on in different ways.

In the 1990s, when Roc-a-Fella Records built its relationship with Hot 97, there was no reported money exchanged. But there were gifts of Cristal bottles, Summer Jam performances, and exclusive interviews. All those instances can influence favorable airplay to Jay Z and the entire Roc family. That impact can last for decades too. When Jay Z and Kanye West released “Otis” in 2011, Hot 97’s Funkmaster Flex premiered the song by going off for 22 minutes straight. Is that the result of payola? Or smart relationship building?

When Mariah Carey was signed to Columbia Records in the ’90s, the label reportedly discounted her late ’90s single CDs to drive them up the charts, force the radio stations to play the single, and build further demand to achieve another Billboard #1 song on the Hot 100. Is that payola? Or arbitrage?

Payola to music is like performance-enhancing drugs to baseball. Yes, it was frowned upon, but it was table stakes to compete at the highest levels. Plus, if an artist doesn’t have hits, payola can only go so far. If a baseball player isn’t already great, the PED impact is hard to sustain.

Brady Anderson’s 50 home runs in 1996 was a flash in the pan. It’s very, very different than Barry Bonds, a three-time MVP before the PED allegations, who eventually became MLB’s all-time homerun leader. Similarly, the influence of ‘pay for play’ for an artist like Iggy Azalea and her hit song, “Fancy,” is very, very different than an artist like Mariah Carey, who has been a hitmaker decade after decade.

If you liked these highlights, check out the full episode. We also covered:

– how radio still holds back popular hip-hop and R&B songs
– why radio wins on convenience
– The Breakfast Club, Hot 97, Z100, and more

Listen to the episode here.

We have a new mini-series we’re launching: the Chartmetric stat of the episode.

As of January 7, 2024, there are two artists who are in the top 10 for global radio airplay but not in the top 20 for Spotify monthly listeners. That’s Tate McRae, who is currently 39th on Spotify monthly listeners, and Luke Combs, who is 345th on Spotify!

It’s a fascinating stat that says a lot about country music’s popularity on Spotify compared to other platforms. Similarly, Morgan Wallen is 13th on radio airplay and 255th on Spotify.

Dan smiling at the camera against a dark background, wearing a blue shirt."
Dan Runcie
Founder of Trapital
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Looking forward to future episodes of Trapital. I’ve been following the newsletters for awhile and always learn something new that’s relevant to hip hop and business. Great job getting the nuggets of info from Matthew Knowles on the 1st episode, can’t wait until the next one!
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I am a real estate investor and came across this podcast after a recommendation from a friend who shares my loves for both hip hop and business. Often, those two interests have such polar opposite “voices” - but Dan’s podcast brings those two together for me. The result is magical. Great guests, too!
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As a guy who came up in NYC during the late 90s / early 2000s rap scene, I appreciate the history revisited by Dan, who obviously has an authentic and unique perspective on the culture. But he’s not only a hip hop historian; he’s also a visionary of art, technology and culture who curates other trend setters from across the globe. Salute!
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One of my fave podcasts hands down
I love Dan’s ability to bring diverse and timely perspectives to the show while asking deeply insightful questions that engage the audience on so many interesting levels. I’ve learned so much in just a short period of listening. Excited for what Dan has in store for the show in the future!
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Great podcast! Keep it up!
I stumbled upon this podcast by learning about Dan / Trapital via LinkedIn. I listen to A LOT of podcasts and I decided to give it a listen. First, Dan has a calm and authentic demeanor, which are great qualities. When he’s talking to his guests it’s very conversational and easy flowing. I’m a former music industry vet so the topics are right up my alley.
Phil Stolaronek

Read what the industry leaders read

Hip-hop mirrors the business world in a lot of ways. While I’ve always thought and known that, it’s great to see those ideas brought to life by someone so knowledgeable about both of those things. Huge fan of Trapital.
PPLS CHAMP
Looking forward to future episodes of Trapital. I’ve been following the newsletters for awhile and always learn something new that’s relevant to hip hop and business. Great job getting the nuggets of info from Matthew Knowles on the 1st episode, can’t wait until the next one!
Cburns08
If you’re looking for a podcast with a wealth of info on the business of hip hop, then Trapital is your new home. Dan is an excellent host who has a myriad of of experienced guests to talk their role in the business of hip hop. Check it out!
RoyalSkegee
If you work in — or have an interest in — the music business, Trapital is a must.
Samu Rast
A good friend of mine put me on this podcast and it took me some time to tap in, but once I did, I couldn’t stop listening! Dan has a talent for pulling out the narratives between lines, connecting it to the culture and then making it make sense. I’m a loyal subscriber and am thankful for the podcast!
Zealous Advocate
I am a real estate investor and came across this podcast after a recommendation from a friend who shares my loves for both hip hop and business. Often, those two interests have such polar opposite “voices” - but Dan’s podcast brings those two together for me. The result is magical. Great guests, too!
Gabriel Blue
As a guy who came up in NYC during the late 90s / early 2000s rap scene, I appreciate the history revisited by Dan, who obviously has an authentic and unique perspective on the culture. But he’s not only a hip hop historian; he’s also a visionary of art, technology and culture who curates other trend setters from across the globe. Salute!
Mrkamal
I love Dan’s ability to bring diverse and timely perspectives to the show while asking deeply insightful questions that engage the audience on so many interesting levels. I’ve learned so much in just a short period of listening. Excited for what Dan has in store for the show in the future!
Greg0188
I stumbled upon this podcast by learning about Dan / Trapital via LinkedIn. I listen to A LOT of podcasts and I decided to give it a listen. First, Dan has a calm and authentic demeanor, which are great qualities. When he’s talking to his guests it’s very conversational and easy flowing. I’m a former music industry vet so the topics are right up my alley.
Phil Stolaronek
Dan sitting at a table with others, smiling and engaged in a discussion, with glasses and a water pitcher on the table.

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