Wednesday, June 6, 2012 - 11:20am
Yesterday Clear Channel announced a groundbreaking deal with the Big Machine Label Group in which it more or less traded AM/FM performance royalties for a break on digital royalty rates (RAIN coverage here).
At Billboard's Country Music Summit in Nashville, Clear Channel Media & Entertainment CEO/chairman John Hogan spoke more about the deal, saying that it helps provide "a very predictable, transparent business model... We are much more motivated to grow the digital business."
Hogan also mentioned that, as a market-based solution, the agreement is probably better than what Congress may legislate. "I'm as big a fan as the next guy of elected officials, but I think it's always a little scary when you look for legislative or regulatory solutions to what should be marketplace solution," he said.
"There is little doubt the deal was a strategic, preemptive move by Clear Channel to strike a favorable deal before Congress gets involved," comments Billboard (here).
"It’s the kind of innovative thing that Congress would prefer, rather than going through the hell of another fight between its friends in the record business on one side and its friends in radio on the other," commented Radio-Info's Tom Taylor (here).
Meanwhile, the NAB "remains steadfastly opposed to a government-mandated" performance royalty, it said in a statement in reaction to Clear Channel's deal. But it takes "no position on free-market agreements negotiated between broadcast companies and other businesses."
And there may be more such agreements on the way. Irving Azoff, a Clear Channel director and chairman of Live Nation Entertainment, tells Bloomberg Businessweek (here), "We’re trying to convince labels to enter into a direct deal because we can’t get legislation passed."
He continued, "Unrealistic rates on the digital side were choking the ability to expand digitally for radio companies."
But Neil Portnow, CEO/president of the Recording Academy, sees Clear Channel's deal as a gateway to action from Congress. "With Clear Channel's recognition of the terrestrial performance right, continued opposition by the NAB will now ring hollow on Capitol Hill," he stated.
The U.S. House of Representatives Subcommittee on Communications and Technology will hold a hearing today on "The Future of Audio," including witnesses from Pandora, the NAB, music industry and tech companies (RAIN coverage here).
You can find more coverage on the statements from the NAB and Recording Academy in Billboard here.