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

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.

How A New Royalty Could Change Radio For The Better.

North Carolina Representative Mel Watt (D) has announced that he’s going to introduce new legislature before the next Congressional recess that will require broadcasters to pay performers a royalty on all the music that they play. Unbelievably, terrestrial broadcasters in the United States are not currently obligated to do so, thanks to the strong lobbying effort of the National Association of Broadcasters (NAB). Broadcasters in most parts of the world already pay these royalties, and US broadcasters on the Internet, satellite and cable do so as well.

Terrestrial radio is a different beast though. Right now radio pays only the songwriters, not the performers, for the songs they play. That means that the writers of a song like “You’ve Lost That Lovin’ Feeling” (the most played song in the US in the 20th century) get paid for every one of it’s more than 8 million plays while the Righteous Brothers, the recording artists of the song, never made a penny from any of it.

Read more on Forbes.

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5 Reasons For A Revolutionary Year In The Music Biz

There was an interesting article at Billboard.biz yesterday entitled, "5 Reasons Why 2010 Will Be Revolutionary For The Music Biz." The article made a few good points, but I'm not so sure if I agree with every premise. Here are the 5 reasons outlined in the article, along with my thoughts on each.

1) The Ticket Master/Live Nation merger. The article states that the merger will enable the new company to sell entertainment packages in such novel ways that it will impact ticket sales for the better. I think that what's really going to change the concert business is the backlash from consumers on a variety of issues, including sky high prices, premium seats only available through ticket brokers, and too many unnecessary ancillary fees. The revolution is indeed coming, but it's the consumer who will be doing the impacting, not TM/LN.

2) The Performance Rights Act changes radio. The Performance Rights Act enables artists other than songwriters to get paid for airplay. The way it is now, only the writers of "You've Lost That Lovin' Feeling" get paid for every one of it's more than 7 million plays while the Righteous Brothers never made a penny. The Performance Rights Act makes sure they're finally given a tiny sliver of compensation for singing the song. The NAB has been painting the act with gloom and doom, stating that radio stations will be going bankrupt everywhere, or turning to talk radio. it might actually be a good thing if they go bankrupt and let someone else take over, but that will never happen. Instead of "big radio" making a big profit every year, they'll make a slightly less big profit and move on.

3) Internet Service Providers become partners. The article states that this is the year when ISPs start enforcing pirating laws and collecting fees for the record labels. Yeah, dream on. The ISP's will merely respond, "Hey, we're just the pipe. You guys are the water flowing through it. Regulation is up to you the way it's always been!" Having the ISPs do the labels dirty work and collecting money for them is just a label fantasy.

4) Spotify will raise the bar for mobil music. If you don't already know, Spotify is a subscription music service that's been pretty successful in parts of Europe, but has yet to debut here in the US because of licensing issues with a few of the major labels. The service is supposed to get going here in 2010, but reports are that it's severely hampered by cash flow and may never have the bucks to be able to put if over the top. My bet is that Apple begins it's iTunes subscription service in 2011, at which time music subscription will take off.

5) Almost any way you slice it, EMI will reshape the industry. EMI used to be a major label but it's recently become a non-entity in the major label world. Cash-strapped, short on management, no respect, and few hits, the only thing it has going for it is a huge catalog. The article thinks that EMI will get turned around and become a major again (of course it would say that, Billboard would love to get some EMI ad dollars). The bet here is that those days are over and if it's lucky, EMI will be relegated to being a catalog manager if it stays alive at all.

Read the entire article at Billboard.biz, then tell me who you agree with.