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How to get the right licences for an internet radio station

You need licences for the music you use online: this article will help point you in the right direction

By James Cridland
Posted 26 August 2014, 8.27am edt
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So, you want to run an internet radio station?

It's easy to produce the audio. It might seem easy to sound just as good as the other radio stations, too. But you need to ensure you have the proper licences. Internet Radio broadcasters that have music as a part of their programming need to have licences from the owners of the copyright in both the recordings that they play and in the underlying songs.

You will probably need to have at least two licences. For many situations (if you plan to make radio advertisements, for example) you'll need to investigate further licences as well.

PRS for Music

This organisation represent the performers and publishers of the work. They offer two sets of licences: first, a limited online exploitation licence, which is for people earning less than £12,500 a year from online use of music (and a maximum usage). Annual licence fees start from £122 + VAT.

If you're earning more than that, PRS have a set of licences called "LOML+", which are aimed at people who are larger operators; and then their full online music licences. The full licence starts at 0.05p per song per listener.

PPL

PPL represents the record companies, and therefore the recordings you'd like to use. Again, they start with a small radio service licence, which costs £195.05 + VAT, but is intended for people who are making less than £5,000 from online music (and no more than 270,000 total song streams per year).

For larger broadcasters, PPL have a larger, standard, radio service. This full licence starts, for a commercial radio service, at 0.0722p per song per listener.

Total costs

So, total costs for a licence to run a large(ish) radio station online are 0.1222 per song, per listener. If you assume 12 songs an hour, that figure is just under 1.5p per listener, per hour - to which you need, of course, to add your bandwidth costs (and your own staff time).

To put this into context: in Q4 2012, Absolute Radio 90s had 436,000 listeners a week. In total, listeners tune in for 4.7 hours each, meaning a total of 2,039,000 listener hours per week. If this were only an online radio station, the music costs would be £30,580 a week, or £1,590,420 per annum.

As you might guess from the above, it might be cheaper to actually broadcast your radio station on DAB as well as online: there's space available in parts of the UK, and that makes your music costs a straight percentage of your revenue (currently around 10.5%).

James Cridland — James is the Managing Director of media.info, and a radio futurologist: a consultant, writer and public speaker who concentrates on the effect that new platforms and technology are having on the radio business. His website is at james.cridland.net, where you can subscribe to his weekly newsletter.
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