Entercom, Glassnote Group swap on-air royalties for streaming discount

Monday, December 10, 2012 - 12:30pm

Here's yet another "marketplace deal" that has a major U.S. broadcaster paying a label an on-air royalty in exchange for decreased streaming royalties. Glassnote Entertainment Group, an independent label and sound recording copyright owner now has a deal with broadcast radio group Entercom Communications.

As the announcement is phrased, Glassnote will "directly participate, along with its artists, in Entercom's over-the-air broadcast radio revenues."

As we've reported, U.S. radio broadcasters aren't required to pay royalties to the owners of sound recording copyrights for on-air play -- but do pay owners and performers for online plays. Obviously, the music industry and performers want to get paid for on-air use of their copyright recordings. At the recent Internet Radio Fairness Act House Judiciary subcommittee hearing, Hubbard Radio President/CEO Bruce Reese (who also represented the National Association of Broadcasters) was pressed repeatedly on radio's broadcast exemption when it comes to sound recording royalties (our coverage is here). Reese responded by saying he would look for more deals in the marketplace that would get copyright owners paid. He was nearly certainly referring to deals such as today's.

Entercom has a similar deal with the Big Machine Label Group (our coverage here). Glassnote (and Big Machine, for that matter) also have similar deals with Clear Channel (coverage here and here).

Glassnote artists include Phoenix, The Temper Trap, Two Door Cinema Club, and Mumford and Sons (pictured).

Clear Channel last week announced a deal of this type with DashGo (here). Clear Channel also has an agreement with classical label Naxos.

CC deals with labels might provide marketplace benchmark for more equitable CRB royalty rates

Monday, October 1, 2012 - 4:55pm

"In setting (webcast royalty) rates, the (Copyright Royalty Board) looks to establish rates that reflect what a willing buyer and a willing seller pay in the marketplace. In past royalty proceedings, that willing-buyer, willing-seller price had to be estimated, as there were no real deals to use as a benchmark. And the estimates all went against webcasters. With a deal like that with Big Machine... 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."

That's industry attorney David Oxenford's take-away from recent "direct deals" between broadcasters and record label for both terrestrial and digital sound recording royalties (the latest of which involved Clear Channel and Glassnote Entertainment, covered in RAIN here).

Copyright Royalty Board judges, per the 1998 DMCA, don't set royalties considering the fairness and "mimimal disruption" of their decision (as is called for in the Copyright Act's "801(b)" standard, which is used in royalty determinations for other forms of digital radio). They are mandated to set a rate at what they think a "willing buyer" would pay and what a "willing seller" would accept. Critics point to this different and unpredictable standard as the reason Internet royalty has been saddled with sound recording royalties that, as a percentage of revenue, are many multiples of those paid by satellite and cable radio. It's also the impetus behind the recent Internet Radio Fairness Act, introduced to both chambers of Congress (in RAIN here).

Oxenford is suggesting that should deals like Clear Channel's and Entercom's (both groups have reached agreeements with Big Machine Records) start to spread to other companies, they could very well represent the "marketplace" agreements with willing buyers and willing sellers that could set "a precedent for lower royalties in future proceedings."

The next round of proceedings to set webcasting royalties starts in 2014 (to set the rates for 2016-2020).

Read Oxenford, a D.C.-based partner at Wilkinson Barker Knauer, in Broadcast Law Blog here.

Clear Channel will pay second label on-air royalties in exchange for online discount

Friday, September 28, 2012 - 1:15pm

Clear Channel has now struck a second deal with a record label that trades an on-air royalty for a discount when the label's music is streamed. Clear Channel will pay Glassnote Entertainment a percentage-of-revenue royalty when the broadcaster plays Glassnote recordings on the air or online. 

U.S. broadcasters are not obligated to pay copyright owners to perform sound recordings on AM and FM, but are required to pay when those same recordings are streamed online.

The press release clearly stressed the "market-based" nature of the deal, crafted to "help drive faster growth of digital radio" and create "a sustainable business model for the digital music industry."

Earlier this year, Clear Channel forged a similar arrangement with Big Machine Records. Broadcast group Entercom last week also agreed with Big Machine on such a deal.

With such deals, Clear Channel is likely positioning itself for a future in which (1) more and more of its audience migrates from its broadcast signals to online listening; and (2) broadcast radio's on-air sound recording royalty exemption eventually ends. By taking on the on-air royalty obligation now (under its own terms, and not those of the U.S. Copyright Office), it secures for itself an online royalty structure more tenable than the current CRB-determined statutory deal.

That statutory royalty is exactly the subject of the (recently-renewed) "fairness" debate in digital radio, including the recently-introduced Internet Radio Fairness Act of 2012. To stream copyright sound recordings online, operators pay royalties that amount to a far higher percentage of their revenues than the use of the same music delivered via satellite radio or cable television. Critics say the royalties are so high as to stifle the growth and development of Internet radio, and eventually deny copyright owners and performers royalties they'd earn from a flourishing industry. The Internet Radio Fairness Act is intended to bring Internet radio royalties more in line with those of other forms of digital radio, and has gained the endorsement of the National Association of Broadcasters.  

Clear Channel CEO Bob Pittman was clear that he thinks both his company and the music industry benefit from more affordable streaming rates. "It’s no surprise to us that Glassnote quickly saw this was a great opportunity to help move the digital radio industry towards a more sustainable future. Not only will this agreement expand his label and artists’ participation in all of Clear Channel’s radio revenues; it also creates a vibrant new digital radio business model that we believe will provide more money for the artists and the labels and more digital choices for the consumer."

Glassnote artists include Mumford & Sons (pictured), Phoenix, Two Door Cinema Club, GIVERS, Childish Gambino, and more.

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