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 OFCOM[1]
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 spot[2] 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 Robertson[3] 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.
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 2018[4],
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
In
2018 the FCC carried out four raids across the United States with levied fines
totalling $161,844. From 1998 until 2017 the FCC[5] 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 Commons[6]
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 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.[7]
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.[8]
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 2014[9]
Haringey Council in London reported that there 19 pirate radio stations
broadcasting in the borough. A new policy was implemented that year with
proactive 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. They believed that should there
methods be employed across the city of London where nearly 150 pirates operated
that the city could save £1 million per year.
London pirate radio has
been a breathing ground for award winning music artistes like Ms Dynamite,
Dizzy Rascal and Normal Jay. Ms Dynamite acknowledged her success being
grounded in pirate radio as a seventeen year old. She warned in her Brit Award
acceptance speech that the music industry could not rely on TV talent shows to
produces stars and that a purge of pirate radio would threaten music genre such
as rap, garage and house music. Jazzie B a former pirate radio broadcaster and
a member of the music collective Soul II Soul said that the pirate stations (especially
in London) were ‘the windows for home grown talent’[10]. There
was a growing music industry around artists who only received airplay from
pirate radio station.
In September 1978[11],
the Irish Independent published an article under the headline
‘£1m Pirate Radio Threat
to RTE Advertising’ in which RTE Assistant Controller of Radio Programming
Kieran Sheedy claimed that the new wave of pirate radio stations across the
country including Big D, ARD and Independent Radio Galway were a major threat
to the finances of the state broadcaster. Three years later it was being
reported that the figure estimated to be lost to the state broadcasters had
more than doubled as the more professional super pirates took to the airwaves.
On October 28, 1980 Aer Lingus a leading semi-state company, Aer Lingus, said
that a statement concerning its association with a Sunshine Radio promotion
that "The tie-in with Radio Sunshine involved no cash transaction."
However, after Sunshine boss Robbie Robinson said he had photocopies of the Aer
Lingus cheque, "which I am going to frame”, an Aer Lingus spokesman said
that contrary to what had been stated previously the airline had in fact paid
some money to the illegal station.
In June 1981, Taoiseach
Charles Haughey called a general election. In the run up to the election
political parties and independent candidates used the pirate stations like ARD
and Big D to get their message across especially to the young voters who they
knew listened in large numbers to these stations. The main reason for use of
the pirates was that R.T.E. were unable to carry actual advertising apart from
party political broadcasts which were strictly monitored and time restricted.
The pirates, with no such restrictions added heavily to their bank balances for
the airtime given to the political parties. The parties that on one hand
promised to close the illegal operators were on the other embracing their
medium to get their message across to the ever growing numbers of listeners.
The leaders realised even if they did not want to admit it that the majority of
the youth of the nation were now listening to the pirates all over the country.
Some of the politicians who appeared on the airwaves included Mary Harney (then
a Fianna Fail candidate), Michael Woods, the Minister for Health and Social
Welfare and Richard Burke of Fine Gael who was interviewed on Big D. Mary
Harney, who became the Tánaiste in the Fianna Fail/Progressive Democrats
Coalition Government, went further than radio and appeared on the pirate
television channel, Channel D who following their interview with Ms. Harney
asked viewers to vote for Ms. Harney because of her support for independent
television.
In 1982 a report pointed
to the major pirate radio stations charging advertisers’ ir£20 – 25 per thirty
second spot, RTE Radio 2 was charging ir£ 72 for the same slot and the main
national station RTE Radio 1 charging 250.00 for the same advert.
As
pirate radio proliferated across Ireland, the stations rarely registered
themselves to pay tax, to pay wages within a statutory framework, to pay
royalties but occasionally
State
bodies intervened. In 1980 the Limerick based station Big L run by Mike
Richardson and Hayman Harris found itself on the receiving end of a tax bill of
ir£17,000. The state tax collection agency said that
‘They
maybe illegal but they are a business and so they must pay tax. The amount is
an estimated assessment in the absence of tax returns.’
In
Ireland within two years of Radio Nova beginning broadcasting illegally in 1981[12],
the station has a 40% listenership rating as compared to the legal state
broadcasters pop music station RTE Radio 2 having only a 20% rating. Nova was
opened by Chris Cary, a former DJ on Radio Caroline in the North Sea and he
used a myriad of companies to run the station and to maximise profits. The
station was so successful in its five years on air that advertising agencies
and corporate Ireland were heavily using the station. The stations across
Ireland, some more professionally ran than other all had high quality rate
cards being produced. The station was described by David
McKenna in the Sunday
Tribune newspaper as
‘a soundscape designed to
produce advertising revenue. Its main aim is to make sure that listeners don’t
change wavelength. Such changes would affect the figures on which Nova’s
advertising rates are based. As far as possible the listener must forget that he
or she is involved in a conscious activity.’
Nova’s transmitters were
located in a portacabin on the grounds of the Green Acres Country Club whose
owner Eugene Brady bought 26% of Radio Nova. Chris Cary estimated that the
initial investment in the station was £150,000 of which he produced the other
76% with Eugene Brady. When Radio Nova was launched, Cary tried for five months
to incorporate his company. The Register at the Companies Office refused to
agree until November 1981 when Nova was registered under the Companies Act
1963. The company formed to oversee the running of Radio Nova was titled 'Nova
Media Services Limited' and the memorandum and articles of association were
drawn up by the solicitor firm of Cawley, Sheerin and Wynne.
Cary used his profits
from his computer business Compshop to launch Nova while Brady in return for
his 26% gave Nova the site for the transmitters and was provided free
advertising for his club on Radio Nova. The property company for The Compshop
was Uniminster Limited who leased 19 Herbert Street originally to the Compshop
and then sub leased it to Radio Nova. With the space leased, the equipment for
the station was leased from a company called Stratford Leasing. This company
located in England was also owned by Chris Cary. When Radio Nova finally closed
its doors in March 1986, Nova Media Services Limited's total assets was
reported as a couple of chairs and eighty thousand car stickers.
In a Sunday Independent
obituary piece of Chris Cary by Liam Collins in 2008, he noted that Cary
claimed that his Radio Nova in its five years on air had generated €20 million
in advertising revenue. At a press conference to launch the Irish Pirate Radio
Archive former Nova DJ Declan Meehan said the Cary once claimed he was paying
his DJ’s more than the then biggest star on BBC Radio 1, Steve Wright who
presented the popular afternoon show on the British station. He also revealed
that at one point a large travel agency was sponsoring a holiday giveaway on
his Breakfast show when he was approached by a rival travel agency who wanted
to wrestle the promotion away from their competitor and offered a larger prize
plus the bonus of a free holiday for the presenter and a friend[13].
In order to boost their
listening figures and therefore their advertising revenue, Nova and her sister
station Kiss FM which had been set up to cope with the massive influx of
advertisers, started a number of cash giveaways, for format of which were
copied by various other stations over the years. In March 1983, Kiss FM
announced that they would play three records in a pre-arranged order and that
the fifteenth caller to the station to say 'You Did It' would win £5000.00. The
winner on that occasion was Jane Biddulph from Churchtown. In September 1983,
Radio Nova carried out a similar promotion, this time giving away £6,000. The
records chosen in order were (i) Wanna Be Starting Something' by Micheal
Jackson, (ii) 'Baby Jane' by Rod Stewart and (iii) 'Lets Dance' by David Bowie.
Again the fifteenth caller when the records were played won the money but it
was not always smooth sailing for Nova's promotions. Another promotion on Radio
Nova ran into trouble when the phone lines jammed when the three records were
played but when repair crews arrived at Stocking Lane to repair the problem
they refused to pass the N.U.J. pickets. The next promotion that they ran was a
written competition when they placed a cartoon in a number of daily newspapers and
requested listeners to write in the funniest caption but the promotion did not
have the same appeal or drama of the phone in competition.
On the charity front in
1982, 1983 and 1984, Radio Nova carried out projects called
'Operation Novacare'
which in 1983 raised £14,000 for the National Rehabilitation Institute. Other
revenue streams included The Nova Roadshow, a travelling disco, was based
mainly at Nova Park but in the early days of the station it was based in
Maxim's Nightclub on Claire Street. On a number of occasions the Nova Roadshow
went to the Isle of Man where the station had a sizeable listenership. The Nova
Boutique was launched from the ground floor of 144 Leeson Street. The shop sold
Nova T-Shirts, pens, car stickers etc. and they also had a five pound
membership club which entitled you to a sticker, a membership card and
reductions to entry at Nova Park.
In 1988 just before the
introduction of the new Wireless Telegraphy Act, the Law
Society in a hard hitting
editorial in their magazine The Gazette criticised the Revenue Commissioners
for allowing businesses to claim business expenses in their annual tax returns
for advertising with illegal pirate radio stations.
There
are many costs attached to operating a pirate radio (or indeed television)
station.
In its final year on the
air Robbie Robsinson successfully ran a number of listener competitions giving
away prizes worth €20,000 in one while €50,000 was handed out in another. Like
so many Irish pirate radio stations across Ireland, Sunshine closed at the end
of December in accordance with the new legislation but it also unsuccessfully
applied for one of the new Dublin independent commercial licences. While
Robinson expended considerable finances with a High Court challenge to the
awarding of the licence he did make one final profit from his pirate radio
station[14]
when the station’s transmitters and aerial were sold to the company that won
the national radio franchise licence, Century Radio.
The activities of
political pirate radio stations can also have economic repercussions.
Government oppositions have often resorted to using pirate radio stations to
spread their propaganda leading to national financial instability and using the
illegal airwaves to encourage civil disobedience. In Northern Ireland in the
late sixties and early seventies as the so called sectarian troubles
intensified across Northern Ireland both side Protestant/Loyalist and
Catholic/Nationalists were using pirate radio stations in their enclaves and
‘no go’ areas to encourage their listeners to stifle the economies of their
opponents by issuing calls onto the streets to man barricades, to boycott shops
and businesses and the generally upset daily life such as hijacking and setting
fire to buses to a steep financial loss for companies across Northern Ireland.
In the era of commercial
pirate radio in Northern Ireland Kiss FM opened March 13th
1985 with the station
opening covered by Ulster Television. Originally broadcasting on 96.5mhz, Kiss
moved to 103mhz FM announcing 102.7 and using jingles from the Chris Cary
station of the same name in Dublin. The station announced that it had taken an
investment of £6,000 to launch the station as a seven day a week operation but
this was offset with the £4,000 in advertising revenue that the station had
taken for its first week of transmissions. This boost did not sit well with the
British Department of Trade and Industry and at 1.50p.m. March 21st 1985 the
station was raided and closed. Pirate radio was big commercial business.
Pirate Radio Cost
Analysis
Expenditure
1.
There are initial costs
involved in setting up a pirate radio station. The transmitter is one of the
main ingredients and the cost can vary from station to station depending on the
operators plan for their station. Some stations in the 70s and 80s built
homemade transmitters but even these
required
the purchase of parts. Some transmitters were purchased on the black market
from legal operators while other was purchased at considerable expense such as
the super pirates in Ireland spending as much as € 10,000 on a good quality FM
Stereo transmitter. Studio equipment is needed and while most operators
purchased their own equipment others stole them from other pirate operators. An
aerial is also required with proper earthing. Some stations need a location
therefore studio and transmitter sites need to be rented. Other stations are
located in an operator’s bedroom, the transmitter is homemade and the aerial is
strung between trees and expenditure is limited but could make as much as a
super pirate in advertising revenue.
2.
A transmitter and the
studio needs power and while some pirates hijack some one else’s supply many
have electricity bills to be paid. Some stations purchased and ran external
generators to keep their pirate on the air.
3.
Some of the bigger
stations paid staff and even Payroll taxes for their staff. Radio Nova in
Dublin even recognised unions like the NUJ within their station even though
Nova’s troubles with the unions helped to lead eventually to its demise in
1986.
4.
As with any business
generating cash, the business whether covered by a registered company or not is
required to pay taxes. The bigger stations often set up limited companies to
limited loses or to launder cash. The setting up of a company in itself cost
money. Legal radio stations are required to pay performing rights such as IMRO
and PPI. In the UK stations avoided this requirement by playing artistes who
had not been signed by a major label.
5.
Another cost that
stations often to factor in is the cost of a raid for their illegal activities.
There is a fine, court costs and the cost of replacing confiscated equipment.
6.
Publicity for the station
cost money whether it was invested in stickers, mugs or pens. Stations today
use social media to promote their station on twitter or instagram. In the
1940’s one Irish station promoted itself by having supporters cross the city
using chalk to write the station information on the pavement, which worked well
until either the police
with
a bucket of water or a heavy shower washed away their promotion.
And while there are costs
involved in opening and running a pirate there are many rewards for shrew
operators.
Income
1. Advertising
is key and the more powerful the stations signal and quality of that signal
will lead to a wider audience. There have been many instances reported when
Sales executives for the stations have disappeared with advertising revenue or
stolen advertisers when a rival operation goes on air. While many mainstream
stations use advertising agencies to source advertisers, pirate radio stations
go into the local community and seek advertising from neighbourhood businesses,
the local butcher, pub or taxi company. The authorities in many countries
including Ireland and Britain have made it offence to advertise on pirate radio
stations but very few have been prosecuted for doing so.
2. At
some stations DJ’s paid in contributions to get on the air. This practice was
known as ‘pay to play’.
3. While
completely illegal the system of ‘payola’ is popular with pirate radio
stations, this is where a record company pay a popular station or DJ to heavily
promote and rotate a record.
4. Many
of the UK and Irish pirate radio stations of the 21st century play
dance, rave and garage music not played by mainstream stations and operators
use their stations to promote raves and dance nights at nightclubs generating
another revenue stream.
5. In
the United States evangelical preachers pay radio stations to pay their shows.
Similar revenue generation was carried out by pirate stations Radio Caroline
and Radio Dublin.
6. Some
pirate stations have eventually earned legal status (Mid West Radio, Ireland,
Radio Caroline, UK, leading to even greater profits from advertising
revenues.
7. For
many DJ’s pirate radio has been a cheap effective way of both learning the art
of radio and gaining experience leading them into full time media careers
across both radio and television. This pirate radio training has also
benefitted legal stations as their new staff have already a good grasp of their
profession. In Ireland in the 1980s when legal radio replaced the pirates, many
shows were presenter driven and when the pirate DJs moved onto the legal
airwaves they brought a ready made audience with them.
