9/12/13: Clear Channel strikes major royalty deal with Warner Music Group

Paul Maloney
September 12, 2013 - 12:55pm

Radio broadcasters aren't legally obligated to pay for the on-air use of copyright sound recordings. The owners of those copyrights, by and large record labels, have long pressed to change that.

Broadcasters and pureplay webcasters alike, however, are legally obligated to pay for the same recordings for online listening. In some cases, these royalties can amount to large percentages of operators entire revenue. As broadcasters see a future with a higher and higher percentage of their listeners consuming content online and via mobile devices, they've joined with pureplay operators in working to reduce these obligations.

Today Clear Channel, the largest U.S. broadcaster, announced it has secured a licensing deal with Warner Music Group designed to work towards both these ends. It's the latest and by far the largest in a series of licensing deals between major U.S. broadcasters and sound recording copyright owners.

Like the previous deals, Clear Channel will "share revenue" (that is, pay a royalty) "from all platforms" (including AM/FM, where the vast majority of the broadcaster's listening still happens) for the use of recordings. Though the details of these deals are never made public, most believe that Clear Channel will benefit through a reduced royalty obligation for online streams, and perhaps reduced uncertainty over on-air royalties. The record industry has the support of several members of Congress to create a licensable right for on-air use of sound recordings (N.C. Rep. Mel Watt promises to introduce a bill to do just that -- see RAIN here).

CNet writes (here), "The pact, Clear Channel's first wide-ranging strategic alliance with a major label, underscores how both labels' and traditional radio are testing new ways to ensure self-preservation in the digital age."

Clear Channel's on-air/online music licensing deals, to this point, have been with independent labels and labels groups. WMG is one of the "big three" record label groups, including labels like Asylum, Atlantic, Elektra, Nonesuch, Parlophone, Reprise, Rhino, Sire, Warner Bros., Warner Music Nashville and more, with a catalog of more than one million copyrights worldwide.

The deal also includes increased Clear Channel promotion of WMG recordings and artists via its over 850 radio stations nationwide (with a monthly audience topping 243 million listeners), its iHeartRadio online radio platform, and more. Clear Channel says WMG will benefit from "programs to dedicate commercial time specifically to launch new music," and promises special digital and online programming, as well as new targeted user interfaces to promote music purchasing.

Brad Hill
September 12, 2013 - 12:55pm

There is an emphasis on advertising solutions this week.

Two days ago Songza closed a capital round of $4.7M for developing its “life moments” sponsorship platform. Yesterday Pandora announced its new CEO/Chairman appointment of Brian McAndrews to replace outgoing Joe Kennedy. Kennedy announced his intent to resign the company last March.

The selection sends a clear signal of Pandora’s intent to double down on monetization of its leadership position in Internet radio, so it’s no wonder that Pandora stock jumped nearly 10% this morning. McAndrews comes with a deep pedigree in digital advertising. As President and CEO of aQuantive, a digital marketing leader that was acquired by Microsoft in May, 2007, McAndrews became Redmond’s APS (Advertising and Publisher Solutions) lead. He comes to Pandora from a managing directorship at Madrona Venture Group, whose portfolio spans a wide range of Internet brands, from Amazon to Cheezburger.

One of McAndrews’ several board positions is at AppNexus, a major ad-buying platform whose CEO, Brian O’Kelley, is regarded as the inventor of ad exchanges. AppNexus executed $700M in advertising purchases in 2012, making it a competitor to Google. The company is rumored to be the next multi-billion dollar IPO.

McAndrews inherits Pandora as it owns leading share across markets (7.42% of total U.S. radio share), 72-million active users from a registered base of about 200-million, a relatively small music inventory of about a million tracks, proprietary recommendation and programming technology, some form of presence in over 100 car models, and a controversial attempt to reduce its statutory royalty payments to recording artists.

Paul Maloney
September 12, 2013 - 12:55pm

Yesterday major record companies Sony, Universal, and Warner, along with smaller group ABKCO, filed copyright suit against satellite radio operator SiriusXM, alleging unauthorized use of pre-1972 sound recordings.

Late last month SoundExchange, the record industry administrator of digital sound recording copyrights, filed its own suit against Sirius for its failure to pay for its use of sound recordings released more than 41 years ago (see RAIN here).

Federal law didn't protect sound recording copyrights until 1972 (older recordings are protected by state laws -- and yesterday's suit cites California law). As such, Sirius hasn't paid for licensed use of these songs, which reportedly account for 10% to 15% of its programming, according to SoundExchange.

The New York Times covers the story here, The Verge here.

Paul Maloney
September 12, 2013 - 12:55pm

Swedish audio component makers Pause Ljud & Bild, reports Digital Trends, have created product called the CataCombo Sound System -- that pumps your favorite Spotify playlist into your casket!

The system is powered by a two-way speaker system and 2.5 GHz Intel core processor. Plus, there's a 7" LCD screen installed into your headstone, so your next-of-kin can see what you've been listening to lately.

Make sure you set your Spotify playlist to "collaborative," so loved ones can update it for you. Your exposure to new music will undoubtedly be limited, and you wouldn't want to appear "stale" and "out of touch."

Naturally, there's a video demostration. See it, and Digital Trends' coverage, here.

The clever "Grooves for My Grave" Spotify playlist at right comes from Digital Trends as well, which credits some of its suggestions to Redditors.