HomeMusicUniversal Music Group Trims Radio Expenses as Format’s Influence Wanes

Universal Music Group Trims Radio Expenses as Format’s Influence Wanes

Universal Music Group, the country’s biggest record label, has recently taken steps to rein in the costs of radio campaigns, multiple sources tell Billboard. The move comes at a time when there is debate around the music industry about the most effective methods of spending marketing dollars and promoting a record, and traditional outlets — airplay, late-night television appearances, and even prominent playlisting on streaming services — don’t always drive engagement.

As many radio formats focused on new music are struggling, more label executives say it’s an open question whether paying big money for airplay is worth it. “The math is just not working,” according to one major label promotions executive outside of the UMG system. 

Record companies have long supplemented their in-house radio departments with help from contractors, known as independent promoters. Working multiple songs in multiple formats across hundreds of stations around the country requires a lot of staff and local relationships. Indie promoters often cultivate those relationships with specific stations by region or format. Some operate on a retainer basis, charging a set amount for the duration of a promotional campaign. Others charge for each add they obtain for a song on station playlists, with costs ranging from a few hundred dollars to several thousand. 

When it comes to the latter model, the world’s leading record company wants to limit the cost of adds, according to four veteran promotions executives. A rep for UMG declined to comment.

“It’s common knowledge Universal has drawn back” from spending as much on radio promotion, says Joey Carvello, a veteran who previously worked in-house for major labels and as an independent. “It’s a hot topic,” adds Daniel Glass, founder of Glassnote Records, who notes that Universal’s new approach was “being spoken about everywhere” at an industry event earlier this year in Los Angeles. 

Major labels have attempted to limit the cost of radio campaigns multiple times over the years. More than four decades ago, Billboard’s Nov. 8, 1980 issue reported that labels in the Warner Music Group system were looking to “realize as much as $3 [million] to $6 million a year in savings by dropping their outside promotion help.” Today, a label aiming to get to the top of the mainstream R&B/hip-hop airplay chart is going to need to budget more than $100,000, executives say; in some cases, a pop campaign can cost over $300,000.

Past efforts by the majors to curb promotion costs were often undone by the necessity of radio exposure. The key difference nowadays is streaming’s ability to mint major artists with little or no radio play. Take 23-year-old rapper Youngboy Never Broke Again: Only Drake and Taylor Swift earned more streams in 2022, according to Luminate, but Youngboy has only ever cracked Billboard‘s all-genre Radio Songs chart once — as a featured act.

Streaming now accounts for 84% of U.S. music industry revenues, according to the RIAA’s 2022 year-end report. And it’s not always clear, even to the people in radio, that airplay drives more streams.

A 2021 report by the market research company MusicWatch found that streaming and listening on social media accounted for 46% of survey respondents’ weekly listening, while AM/FM radio accounted for 16%. A survey by MIDiA Research last year found that YouTube was the leading source of music discovery. And for the all-important Gen Z, TikTok was in second place.

MusicWatch’s study also indicated that streaming dominated lean-in listening — YouTube, Spotify, Apple Music, and Amazon Music accounted for 56% of this activity, as compared to 13% for broadcast radio. That’s important because lean-in listeners are likely to be more active fans, who might be inclined to buy tickets or vinyl or sweatshirts from an artist they love.

In this environment, a major-label radio promotion executive complained last year that the cost of airplay may not make economic sense. He recalls needing to spend $3,000 to get a song into rotation in a small city. That airplay would need to drive around a million streams in that area alone “to justify that expense,” he said. The city’s population was less than 150,000 people.

Of course, not everyone in the music industry feels the same. “At the end of the day, radio makes pop stars,” Carvello says. And Midia’s survey found that, outside of Gen Z, radio was the number two source of music discovery after YouTube.

Glassnote — the independent label home to Phoenix and Mumford & Sons — has no plans to change its radio strategy, according to Glass: “Independent promotion has been very important to the growth of Glassnote over the years. We’re not going to change our loyalty.”

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