Monday, September 16, 2013

The Clear Channel - Warner Music Deal: Not What It's Cracked Up To Be

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It was announced last week that radio station group Clear Channel Communications and Warner Music Group (WMG) entered into a “historic” agreement where the label and its artists would finally be paid for airplay performances on Clear Channel’s 850 terrestrial broadcast stations. The United States is one of the few countries in the world where that hasn’t happened until now, as broadcasters have been resisting the notion for years, successfully fighting any legislation that promises to do so. Performance royalties are paid on satellite and digital radio streams however.

Although the terms of the deal haven’t been released to the public, insiders have intimated that Clear Channel will pay WMG 1% of advertising for terrestrial broadcasts and 3% for digital, which could amount to some $50 million over three years, including an up front payment. For that it receives a discounted rate on digital streams from the 22 cents per 100 streams it pays now to no less than 12 cents per 100 streams. WMG will also receive special product promotion from Clear Channel stations that would include album previews, interviews or other kinds of special broadcast segments, as well as artist appearances at events like the iHeart-Radio Music Festival

While there’s generally been praise for this agreement, I’m afraid I can’t be so kind, as it may not be all it’s cracked up to be. When looked at closely, it seems to provide possible downsides for all parties involved, especially the one generally missing from the conversation - the artists. Read more on Forbes.

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