Now a second broadcaster, Entercom Communications, has made an agreement with record label Big Machine to pay a percentage of ad revenue royalty on over-the-air plays of Big Machine recordings in exchange for lower streaming royalties.
In June Clear Channel and Big Machine announced a similar deal (coverage here), perhaps signalling Clear Channel's understanding that (a) online streaming will soon be a far larger part of its business than it is today; and (b) it's likely that broadcast radio's exemption from sound recording royalties days are numbered.
"As great and leading visionaries in the broadcast world continue to look into the future they are seeing where listeners are going in regards to how radio is being used now and where and how it will be used in the very near future," Big Machine president Scott Borchetta said. His company, an independent label with acts like country stars Taylor Swift, Tim McGraw, Rascal Flatts, and Reba McEntire, announced at the RAB NAB Radio Show in Dallas today its agreement with Entercom, owner of more than 100 stations in 23 U.S. markets.
Terrestrial broadcasters pay royalties amounting to a small percentage of their revenues to the composers and publishers of music. Congress has not mandated broadcasters pay for the use of copyright sound recordings, a fact that's long angered the record industry.
Internet radio, while paying similar compostion/publishing royalties as broadcasters, is required to pay sound recording copyright owners royalties that -- if not for emergency deals that temporarily reduced the rate the government set -- would have amounted to multiples of even the most successful webcaster's annual revenue.
Pandora founder Tim Westergren pointed to the Clear Channel/Big Machine agreement at the time as "evidence that even for a company of Clear Channel’s size and business competence, they are realizing that Internet radio is a tough business... I feel like it’s just one more signal that something is broken in the royalty rate setting for Internet radio." Westergren had addressed (here) the "Future of Audio" House Subcommittee on Communications and Technology hearing right after the Clear Channel deal was announced.
Apparently, CBS Radio has no plans to make any such agreements with labels. At the Radio Show, CBS CEO Leslie Moonves, said, "The idea that we have to pay them to put their music on our radio stations is absurd."
Read more in The New York Times here.