Tuesday, April 9, 2013 - 2:15pm
There's now yet another "marketplace" deal between Clear Channel and a record label -- this time, Wind-Up Records -- that will have the broadcaster pay a share of ad revenue for its broadcast of the label's music. In exchange, Clear Channel gets a discount on its royalty obligation when it streams the same music.
One reason deals like this are significant is broadcasters in the U.S. are not compelled to pay copyright owners or performers for the broadcast use of copyright sound recordings. The Digital Millennium Copyright Act of 1998, however, requires payment for the digital use (e.g. webcasting, satellite radio, cable radio) of this material. While the music industry has long bemoaned broadcasters' free over-the-air use of its intellectual property, Internet radio and other digital services have chafed under royalty obligations that can amount to half (or more) of revenues.
Such agreements could be a sign that broadcasters like Clear Channel understand the broadcast royalty exemption may not last forever, and what's more, online delivery of content is becoming more and more vital to radio. On the other side, labels like Wind-Up perhaps see that webcasting in their future too.
Industry legal expert and authority on royalties David Oxenford has written that these deals could be pivotal in upcoming government deliberations on setting a statutory U.S. webcasting royalty rate. Without actual marketplace royalty agreements, Copyright Royalty Board judges have so far been compelled to use the "willing buyer willing seller" standard and set royalties where they think a hypothetical market players would settle. And so far, all of those determinations have been wildly in the record companies' favor.
When Clear Channel's "royalty swap" agreement with the Big Machine Label Group was announced, Oxenford wrote, "the pro-record company outcome of the CRB proceedings may well be changed if these deals can be shown to be representative of the real value of the public performance of the sound recording." (Read more in RAIN here.)
Oxenford moderated "The Song Plays On," a panel discussion concerning webcast royalties, Sunday at RAIN Summit West.
Clear Channel has struck similar deals with Glassnote Entertainment Group, Dualtone, DashGo, rpm Entertainment, Robbins Entertainment, and Naxos.
Wind-up Records launched a number of multi-platinum rock artists, including Evanescence, Creed, Finger Eleven, and Seether, and has brought on Five for Fighting, O.A.R. and The Darkness, among others.