History of Radio - Legal Issues With Radio

Legal Issues With Radio

When radio was first introduced in the 1930s many predicted the end of records. Radio was a free medium for the public to hear music for which they would normally pay. While some companies saw radio as a new avenue for promotion, others feared it would cut into profits from record sales and live performances. Many companies had their major stars sign agreements that they would not appear on radio.

Indeed, the music recording industry had a severe drop in profits after the introduction of the radio. For a while, it appeared as though radio was a definite threat to the record industry. Radio ownership grew from two out of five homes in 1931 to four out of five homes in 1938. Meanwhile record sales fell from $75 million in 1929 to $26 million in 1938 (with a low point of $5 million in 1933), though the economics of the situation were also affected by the Great Depression.

The copyright owners of these songs were concerned that they would see no gain from the popularity of radio and the ‘free’ music it provided. Luckily, everything they needed to make this new medium work for them already existed in previous copyright law. The copyright holder for a song had control over all public performances ‘for profit.’ The problem now was proving that the radio industry, which was just figuring out for itself how to make money from advertising and currently offered free music to anyone with a receiver, was making a profit from the songs.

The test case was against Bamberger Department Store in Newark, New Jersey in 1922. The store was broadcasting music throughout its store on the radio station WOR. No advertisements were heard, except for at the beginning of the broadcast which announced "L. Bamberger and Co., One of America's Great Stores, Newark, New Jersey." It was determined through this and previous cases (such as the lawsuit against Shanley's Restaurant) that Bamberger was using the songs for commercial gain, thus making it a public performance for profit, which meant the copyright owners were due payment.

With this ruling the American Society of Composers, Authors and Publishers (ASCAP) began collecting licensing fees from radio stations in 1923. The beginning sum was $230 for all music protected under ASCAP, but for larger stations the price soon ballooned up to $5,000. Edward Samuel's reports in his book The Illustrated Story of Copyright that "radio and TV licensing represents the single greatest source of revenue for ASCAP and its composers and average member of ASCAP gets about $150–$200 per work per year, or about $5,000-$6,000 for all of a member's compositions. Not long after the Bamberger ruling, ASCAP had to once again defend their right to charge fees in 1924. The Dill Radio Bill would have allowed radio stations to play music without paying and licensing fees to ASCAP or any other music-licensing corporations. The bill did not pass.