THE ECONOMICS OF PIRATE RADIO Illegal unlicensed pirate radio has been part of the airwaves from the first days of regulation. ‘Radio pirates’ initially were those who refused or failed to pay for a license to listen to radio while in later years it has referred to those who have broadcast without a licence. Pirate radio especially in the western world has been a commercial success and has created a radio industry once the preserve of state monopolies. In 2010, the British regulator OFCOM1 claimed that some UK land based pirate radio stations were making £5,000 per week from advertising. In 1965 and 1966 before the Marine Offences Act was passed by the British parliament in 1967, Radio Caroline broadcasting from International waters off the East coast of Britain was generating £800,000 to £900,000 per year translating into today’s terms as £14 - £15 million pounds per annum in revenue streams. The cash for Caroline was garnered from spot advertising at £160 per spot2 having begun in 1964 charging £90 per 30 second spot, pay to play deals with record companies known as ‘Payola’ a practice banned in many territories including the United States where one DJ, Phil Lind claimed at a Congressional hearing that he had been paid $22,000 to play one record and from US based evangelical preachers who purchased late night airtime at £150 per show transmitted. According to author Mike Barron Radio Caroline was an instant success, ‘One of London’s biggest advertising agencies was said to be planning to advertise with the pirate ships through its Dutch and French companies. On the advertising front it was Caroline which hit the jackpot. On May 11th 1964 £30,000 worth of advertising poured in.’ The pirates claimed according to Horace Robertson3 that by broadcasting records from little known artists or recording companies they played a substantial part in breaking the record monopoly in Great Britain where in the early 1960s ninety eight percent of all records sold bore the label of only four manufacturers. According to one claim with the help of the pirates small record companies were able to get twenty present of the market in three years. 1 ‘Illegal Broadcasting – www.ofcom.org.uk 2 ‘How a Radio Ship and 7 Men Shook Up Britain in 1964 (2014) 3 The Suppression of Pirate Radio (1982) by Horace Robertson In Ireland pirate radio especially throughout the 1980s created a fledgling radio industry that thrives today as the independent commercial radio sector. The so called super pirates of the 80s including Sunshine Radio, Radio Nova, WLS and ERI earned millions of Euro in revenue through advertising but were heavily criticised as many ignored the need to pay taxes or royalties. With Government inaction the pirate stations began to expand their boundaries broadcasting for longer, with better equipment and most importantly eating into advertising revenue. Initially this was not a major problem for the State broadcaster as the adverts aired were for the local butcher or corner shop who would never be able to afford or consider on RTE radio but with the arrival of high powered professional stations with massive ratings, corporate advertisers seeking for value for money began to drift away from RTE and create large profits for many of the pirate radio stations who despite the illegal status paid their taxes. Illegal broadcasting has many monikers and therefore many versions of financial structures. Some titles attached to this broadcasting include pirate radio, free radio, clandestine radio and bootleg radio they are however all illegal and their operators subject to the rigours of laws that differ in severity and enforcement in various jurisdictions. At a radio conference in Luxembourg in 20184, Jose Perez who had been involved in illegal broadcasting in Madrid felt that ‘pirate radio’ referred to commercial illegal broadcasting, ‘free radio’ was exactly that, commercial free and the station subsidised by a co-operative with DJ’s paying subscriptions to get on air while ‘clandestine radio’ is primarily seen as politically motivated. Illegal radio differs across the globe often dependent on the attitudes of the authorities towards the piracy of frequencies. In the United States, pirate stations are often described as amateurish, fun and quirky as the FCC pursues the broadcasters in a cat and mouse game. Stations move frequency and location regularly in an attempt to stay ahead of raids. Some stations have become part of a sub culture including Orphan Radio in Seattle. Orphan was launched by musicians Sage Redman and Joe Gillick with its first broadcast in June 2017 as a promotion tool for Orphan Records that the couple had began in 2015 but struggled to get airplay on local radio.5 4 University of Luxemburg Summer School on Transnational Radio 5 www.seattlemet.com In 2018 the FCC carried out four raids across the United States with levied fines totalling $161,844. From 1998 until 2017 the FCC6 made 2,187 visits and 148 raids on pirate stations across the country. There were Notices of Apparent Liability fines and illegal broadcasting fines totalling $ 4,701,558 (an average $425). Many of these fines remained uncollected despite the authorities in attempt to collect and court challenges. One of the largest fines levied was against a pirate television station that totalled $144,344. As of the summer of 2018, the US congress is debating a new law the ‘Preventing Illegal Radio Abuse Through Enforcement Act or the Pirate Act which would fine the pirate operator $100,000 per day broadcasting illegally and up to $2 million for each incident of conviction of pirate broadcasting. In the UK the first wave of pirate radio in the 1960s was primarily based off shore with stations like Radio Caroline and the very financially successful Radio London broadcasting from ships in the North Sea with other stations based on World War Two defensive towers in the Thames Estuary. Many of today’s pirate stations especially in major cities like London and Birmingham are known as ‘tower pirate radio’ as operators base themselves on the roofs of many of the tower blocks. These pirate broadcasters air music by artistes that could not and often would not get airplay on mainstream stations whether they are BBC or ILR. OFCOM claimed not only that some of these stations were making £5,000 per week but that they were being used by criminal gangs to distribute drugs through coded message given out on air. Conservative politician James Brokenshire claimed in a House of Commons7 debate that these so called ‘tower stations’ displayed ‘a wanton disregard for the health and safety of others’. This was based on stories that some of these stations were siphoning off electrical supplies from electric door locks and elevator power units. Kiss FM was launched in London in October 1985 broadcasting on 94FM. Those behind the station were Gordon ‘Mac’ McNamee, Tosca, Pyers Easton and George Power. After just three days on air the station was raided by the DTI but came back on air a couple of days later. Another more aggressive raid on December 11th with McNamee claiming that the raid ‘had caused significant financial problems’. D.J.s 6 United States Federal Communications Commission Report 7 Hansard – British Parliament Papers who made a name for themselves and went onto successful careers in national radio included Tim Westwood and Trevor Nelson. Kiss claimed at one time that they had half a million listeners and in 1987 even though a pirate station they came second in an Evening Standard newspaper poll as most popular station in London second to the legitimate Capital FM. McNamee knew the power of the revenue that Kiss was creating and he set up a front company for Kiss business dealings and created another revenue stream by starting hugely popular club nights which were heavily publicised on the station capitalising on its growing listenership base.8 In 1988 Kiss FM the pirate closed and applied for one of the new licences in London which they won at the second attempt with the now legal Kiss launching on September 1st 1990. By 2010 Kiss was reporting £9.7m in turnover translating to a £3m profit.9 In 1983, Skyline Radio in South London was raided twice within 48 hours. The first raid netted the authorities £7,500 in pirate equipment and the second raid a further £13,000 was taken. The DTI complained that while fines were being issued by the courts, the fines were not been paid and the cost of collection made it financially difficult. In October 1984 Horizon Radio broadcasting from Bellenden Road, Peckham London was raided by the DTI (Department of Trade and Industry) enforcement officers and £20,000 worth of pirate equipment was confiscated. The station owner Chris Stewart was found guilty and fined £1,000 but because the transmitter went ‘missing’ between the studio and the DTI van the prosecution were unable to prove illegal broadcasting. OFCOM identified two strands of revenue advertising dance and rave events and DJs paying 20 per hour to be on air to get exposure. In 201410 Haringey Council in London reported that there 19 pirate radio stations broadcasting in the borough. A new policy was implemented that year with proactive 8 Interview with Gordon McNamee with www.smarta.com 9 ‘Kiss FM From Radical Radio to Big Business’ by Grant Goddard 10 YouTube patrolling of tower blocks to prevent pirate stations locating both their transmitters and antenna on the high towers. Within a year the Council reported that almost all pirate radio broadcasting has ceased saving the Council £90,000 in enforcement and loss of fines.