performance royalty

Pandora's Westergren: CC/Big Machine deal "one more signal that something is broken" with Internet radio royalties

Thursday, June 7, 2012 - 11:40am

House hearing on "The Future of Audio"Yesterday's "Future of Audio" House hearing, as expected, centered on the debate surrounding radio royalties. You can find our original coverage of the hearing and witnesses' testimonies here.

Common ground was found between broadcasters and webcasters in the "broken" state of digital royalties. "While we [webcasters and broadcasters] might disagree on some points," said Commonwealth Broadcasting CEO/president Steve Newberry, speaking on behalf of the NAB, "we’d both agree the Copyright Royalty Board set a rate structure that has suffocated the expansion of the industry."

He continued, "If we want music streaming to survive, we need to find a better balance between royalty payments and platform growth which at the end of the day will help broadcasters and artists."

Pandora founder Tim Westergren agreed, pointing to Clear Channel's new deal with the Big Machine Label Group 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."

Pandora has reportedly spent more than $50,000 so far this year to lobby Congress to improve streaming royalties.

Legislators in the hearing applauded Clear Channel's deal. "It looks like it could break the logjam that has plagued this space — and best of all it doesn’t require legislation or regulation," said Rep. Fred Upton (R-MI). Former broadcaster Rep. Greg Walden (R-OR) said, "This deal shows that radio broadcast stations and record labels can get to yes."

While RIAA CEO Cary Sherman also praised the deal, he said "we need an industry-wide solution not a label-by-label piecemeal solution and we don’t know if other radio groups will feel the same economic motivation to do a deal."

All in all, AdWeek said the hearing "didn’t reveal anything new." It simply gave "the opposing sides in both debates a chance to rehash old rivalries and open old wounds."

You can find more coverage from AdWeek here, from the L.A. Times here and from Billboard here. You can also find the witnesses' testimonies from the U.S. House of Representatives Subcommittee on Communications and Technology here.

All sides of radio royalty debate to testify in House subcommittee hearing tomorrow

Tuesday, June 5, 2012 - 11:35am

CongressThe U.S. House of Representatives Subcommittee on Communications and Technology will hold a hearing tomorrow on "The Future of Audio." Witnesses to testify include Pandora founder and Chief Strategy Officer Tim Westergren, along with representatives from the Consumer Electronics Association (CEA), CTIA, RIAA, NAB and others.

The hearing will take place tomorrow at 10:15AM Eastern.

Westergren's testimony will focus on the "severe and fundamental problem" facing Internet radio. "We are subject to an astonishingly disproportionate royalty burden compared to these other formats [AM/FM radio and satellite radio]," his written statement says. "The inequity arises from the fact that Congress has made decisions about radio and copyright law in a piecemeal and isolated manner... It is time for Congress to level the playing field and to approach radio royalties in a technology neutral manner."

Gary Shapiro, President and CEO of the CEA, will offer a similar argument: "No one source should be given preferential treatment over all others. For this reason alone, we do not agree that Congress should take any action favoring broadcast radio over any other source of audio."

Cary Sherman, Chairman and CEO of the RIAA, will also argue that broadcasters pay a performance royalty.

Arguing against platform parity will be Steven W. Newberry, President/CEO of the Commonwelath Broadcasting Corp., speaking on behalf of the NAB. He will argue broadcast radio should continue to be exempt from paying performance royalties because of its impact on local communities and other government regulations it must adhere to, but from which webcasters are exempt.

Jeff Smulyan, Chairman, President, and CEO of Emmis Communications will testify in favor of regulation that puts FM chips in cellphones. CTIA VP Christopher Guttman-McCabe will argue that instead of regulation, FM chips in cellphones "should be driven by consumer preference." He will also request a "light touch" from Congress when it comes to other matters, like spectrum.

Other witnesses to testify include Ben Allison, the Governor of the New York Chapter of the National Academy of Recording Arts and Sciences and David M. Israelite, President/CEO of the National Music Publishers' Association.

You can find more information about the hearing here.

Clear Channel to pay percentage of music advertising revenue to Big Machine Label Group

Tuesday, June 5, 2012 - 8:00am

Clear ChannelClear Channel, the largest owner of radio stations in the U.S., has agreed to pay Big Machine Label Group performance royalties for the use of sound recordings on AM/FM in exchange for more advantageous digital royalty rates. Essentially, Clear Channel will pay the label an undisclosed percentage of music advertising revenue for all broadcasts -- digital and terrestrial. That enables Clear Channel to avoid SoundExchange and the per-song, per-listener royalty rate.

Clear Channel CEO Bob Pittman says that's the advantage of the deal. "I can't build a business space based on paying money for every time I play a song," he said, "but I can build a business by saying I will give a percentage of revenue that I bring in... What we are really trying to do is come up with a predictable model." Clear Channels hopes to make more direct deals with labels this year, but Pittman says they'll need to wait and see if the deal with Big Machine works out economically first. "Starting small is the way to do it because it will have less of an impact."

Said John Hogan, Chairman and CEO of Clear Channel Media and Entertainment: "Today, 98% of our listening is terrestrial broadcast and 2% digital -- with record labels and artists only paid for the 2%. This new agreement expands label and artist participation from just digital to terrestrial broadcast radio revenues in one comprehensive framework that will give all of us a great incentive to drive the growth of the digital radio industry and allow everyone to participate financially in its growth. This market-based solution helps bring the best in music to radio listeners wherever they want to hear it."

Radio-Info calls the deal "a potential game-changing revenue deal to fuel digital radio's growth." Billboard dubs the partnership "unprecedented."

Big Machine Label Group includes artists like Taylor Swift, Tim McGraw, Rascal Flatts, Edens Edge, Ella Mae Bowen, Reba McEntire and others. "Now, we can align our interest with radio in a predictable model based on ad revenue so that we can drive digital growth," commented the label's president and CEO Scott Borchetta. "When stations tell me that they can't afford to broadcast digitally, what good does that do me?"

iHeartRadioClear Channel has also launched a new channel on iHeartRadio: Big Machine Radio. It will feature music from the label's artists, plus interviews, rare recordings and a weekly "From the Vaults" feature (including archived radio specials from artists' early days). Find more info about the new channel from Clear Channel here.

What kind of impact will this deal have on the industry at large? "If Clear Channel turns to other indie labels and offers the same deal, it could be setting a market rate precedent for the day, should it ever come, when such a sound-performance rate is legislatively enacted," comments Billboard. "Also, if Clear Channel sticks to dealing with indies, the company could set a rate precedent without dealing with the major labels, which tend to ask for big advances and aggressive rates."

"Because of its sheer size, everything Clear Channel does affects other groups," writes Radio-Info's Tom Taylor. "There could be howls."

You can find the companies' press release here and further coverage from Billboard here and Radio-Info here.

Clear Channel to pay percentage of music ad revenue to Big Machine Label Group

Tuesday, June 5, 2012 - 11:35am

Clear ChannelClear Channel, the largest owner of radio stations in the U.S., has agreed to pay Big Machine Label Group performance royalties for the use of sound recordings on AM/FM in exchange for more advantageous digital royalty rates. Essentially, Clear Channel will pay the label an undisclosed percentage of music advertising revenue for all broadcasts -- digital and terrestrial. That enables Clear Channel to avoid SoundExchange and the per-song, per-listener royalty rate.

Clear Channel CEO Bob Pittman says that's the advantage of the deal. "I can't build a business space based on paying money for every time I play a song," he said, "but I can build a business by saying I will give a percentage of revenue that I bring in... What we are really trying to do is come up with a predictable model." Clear Channels hopes to make more direct deals with labels this year, but Pittman says they'll need to wait and see if the deal with Big Machine works out economically first. "Starting small is the way to do it because it will have less of an impact."

Said John Hogan, Chairman and CEO of Clear Channel Media and Entertainment: "Today, 98% of our listening is terrestrial broadcast and 2% digital -- with record labels and artists only paid for the 2%. This new agreement expands label and artist participation from just digital to terrestrial broadcast radio revenues in one comprehensive framework that will give all of us a great incentive to drive the growth of the digital radio industry and allow everyone to participate financially in its growth. This market-based solution helps bring the best in music to radio listeners wherever they want to hear it."

Radio-Info calls the deal "a potential game-changing revenue deal to fuel digital radio's growth." Billboard dubs the partnership "unprecedented."

Big Machine Label Group includes artists like Taylor Swift, Tim McGraw, Rascal Flatts, Edens Edge, Ella Mae Bowen, Reba McEntire and others. "Now, we can align our interest with radio in a predictable model based on ad revenue so that we can drive digital growth," commented the label's president and CEO Scott Borchetta. "When stations tell me that they can't afford to broadcast digitally, what good does that do me?"

iHeartRadioClear Channel has also launched a new channel on iHeartRadio: Big Machine Radio. It will feature music from the label's artists, plus interviews, rare recordings and a weekly "From the Vaults" feature (including archived radio specials from artists' early days). Find more info about the new channel from Clear Channel here.

What kind of impact will this deal have on the industry at large? "If Clear Channel turns to other indie labels and offers the same deal, it could be setting a market rate precedent for the day, should it ever come, when such a sound-performance rate is legislatively enacted," comments Billboard. "Also, if Clear Channel sticks to dealing with indies, the company could set a rate precedent without dealing with the major labels, which tend to ask for big advances and aggressive rates."

"Because of its sheer size, everything Clear Channel does affects other groups," writes Radio-Info's Tom Taylor. "There could be howls."

You can find the companies' press release here and further coverage from Billboard here and Radio-Info here.

David Carson explains Copyright Office's roles and stances on copyright issues impacting radio

Wednesday, May 9, 2012 - 12:10pm

David Carson at RAIN Summit West 2012"We're nothing to be afraid of," chuckled David Carson, General Counsel of the U.S. Copyright Office, during RAIN Summit West 2012. Carson was interviewed on-stage by industry attorney and Davis Wright Tremaine partner David Oxenford. "Are you to be feared?" Oxenford had asked, on behalf of the webcasters and broadcasters in the audience.

Carson insisted the answer is "no." In fact, he said the Copyright Office has "hardly anything to do with" what is perhaps the biggest copyright-related sore spot among webcasters: setting royalty rates. That job is mainly handled by the Copyright Royalty Board.

However, Carson (pictured) did explain that the Copyright Office can review the CRB's decisions for "legal error," and any corrections can become legal precedents in the future. The CRB can also consult the Copyright Office about legal questions, and the Copyright Office makes recommendations about who should serve as a judge on the CRB.

In fact, Carson was part of a panel that just recently recommended the new CRB judge, Suzanne Barnett (RAIN coverage here).

The Copyright Office does take stances on copyright issues, though, and makes recommendations to Congress. One such issue -- "the most glaring," in Caron's opinion -- is the broadcast radio performance royalty. Carson said that since before 1978, the Copyright Office has "taken the position that sound recordings should be entitled to a performance royalty just like musical compositions are... We are one of the few countries on earth that doesn't actually provide a performance royalty for sound recordings [played on AM/FM broadcast radio]." (Internet and satellite radio in the U.S. do pay performance royalties.)

To the Copyright Office, explained Carson, broadcast radio's performance royalty exemption "seems sort of bizarre" and "strange."

Oxenford questioned Carson about whether the Copyright Office has, or should, consult broadcasters about that stance. "That's what Congress does," answered Carson. "We advise Congress." And while sometimes Congress requests the Copyright Office to conduct studies and discuss the matter with stakeholders, more commonly "we're actually directed not to talk to stakeholders. 'We want your expert advice,' [instructs Congress]... and as often as not they thank us for our recommendations and then go off and do something else."

All that said, "we can expect no copyright legislation this year," predicted Carson, thanks in part to the election.

Carson also discussed the situation on pre-1972 sound recordings, and offered his thoughts on the recent SOPA debacle (when "suddenly politics wasn't played by the usual rules").

You can watch the entire interview with David Carson thanks to RTTNews here.

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