Music Is Rented. That’s the Problem.

Radio & Audio
Escrito por Fernando Pérez

Music radio has depended on borrowed music.

The next advantage may come from personality and connection.

For decades, the model was simple:

Borrow the music.

Aggregate the audience.

Sell the attention.

That worked.

Distribution was scarce. Music costs were relatively predictable. Over-the-air broadcasting did not carry the same royalty burden as digital audio.

That structure is starting to shift.

Global Music Rights is one signal.

Traditional radio licensing has mostly operated through ASCAP, BMI, and SESAC, with payments generally tied to revenue formulas.

GMR introduced a more negotiated and less standardized model, often with minimum guarantees and greater leverage in licensing.

If more rights organizations or large catalog owners move in that direction, music costs become harder for broadcasters to predict and manage.

At the same time, radio listening keeps moving into digital environments: apps, smart speakers, connected dashboards, and streams.

That matters because digital delivery adds royalty layers that traditional AM/FM historically avoided.

So the pressure is not just higher cost.

It is less control.

For broadcasters, the issue is not that music is losing value.

It is that the value increasingly sits with the rights owner, not the distributor.

That creates the strategic problem.

If your core product is externally owned, increasingly fragmented, and available almost everywhere, it becomes harder to build a defensible business around that product alone.

Over time, it does not just raise costs.

It reduces control over the business itself.

Streaming already shows the pattern.

Spotify has global scale, strong demand, and growing revenue.

But margins remain constrained because it does not fully control the core input: the music itself.

Labels, publishers, and catalog owners control the asset every major platform needs.

As streaming grows, the negotiation over how value is divided keeps intensifying.

It is also worth being precise about what streaming actually replaced.

Streaming did not primarily replace radio.

It replaced music ownership.

CDs and downloads were transactional.

Streaming turned that into ongoing access, expanding consumption while changing how value is distributed over time.

Radio has always been a different layer.

It is discovery, habit, and ambient listening, not ownership.

But that distinction does not protect radio from the current shift.

Streaming normalized on-demand access.

It trained the audience to expect control and ubiquity.

It also strengthened the leverage of rights owners.

Streaming made music easier to access.

It did not change who owns it.

That matters because the rights owner keeps leverage over the distributor.

As platforms scale, a large share of revenue flows back to rights holders.

Growth continues, but the structure limits how much of that growth remains with the distributor.

Radio has not fully faced that same pressure because legacy broadcast economics gave it protection.

But that protection weakens as listening shifts into digital environments and the rights landscape becomes more fragmented.

Streaming is the leading indicator.

Radio may be the lagging version of the same pressure.

In both cases, the distributor depends on a core asset it does not own.

That is a weak position when costs rise and alternatives are everywhere.

That is the signal.

Music rights are becoming a margin constraint across audio.

If music is rented, expensive, and available everywhere, it becomes harder to use music alone as the foundation for long-term differentiation.

Which brings it back to the opening point.

If music is rented, what can radio build?

Personality. Trust. Habit. Local relevance. A point of view.

Podcasting has already demonstrated the economics.

Strong hosts and strong shows create direct audience relationships.

They extend across broadcast, podcast, social, and live formats.

They support higher-value advertising through host reads and integrations.

Most importantly, they give media companies and talent something more durable than access to the same songs everyone else can play.

Companies like iHeartMedia are investing heavily in podcasting for digital growth.

But the larger opportunity may be to bring that model back into broadcast itself.

Not by copying old talk radio.

By building modern personality-led formats that can move across broadcast, podcast, video, social, events, and sponsorship.

That is an opportunity for talent, not a threat.

Radio began as a personality-driven medium.

It later scaled through music and distribution.

Now distribution is no longer scarce, and music is no longer a strong enough differentiator by itself.

So the system shifts again.

This is not nostalgia.

It is economics.

Music can still aggregate attention.

But it no longer secures the business.

If the core input is rented, control moves elsewhere.

So the question is not whether personality matters.

It is whether anything else can replace what music no longer protects.

Deep Dive & Data

Fernando Pérez
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