Warner Music Group

Clear Channel cuts revenue deal with Black River Records

Monday, October 21, 2013 - 11:00am

Adding to its portfolio of custom royalty-payment deals with record labels, Clear Channel reached an agreement with Black River Records, a country label whose roster includes Kelly Pickler, Craig Morgan, and Glen Templeton.

Details were not announced, but this deal could be modeled on previously-struck arrangements with Warner Music Group and smaller labels like Big Machine, Glassnote, Dualtone, Naxos, and Suburban Noize. The template includes new royalty payments to the label for terrestrial airplay, a cost that radio stations are legally exempt from paying under U.S. regulations. In the Warner Music deal, the label agreed to lower royalties for streaming play of its content by Clear Channel webcasts, where the statutory exemption does not hold. There is also a promotional component to that agreement, wherein Clear Channel stations commit to featuring WMG albums and artists.

Revenue-share deals that follow along these lines are sometimes skeptically considered a new form of payola. (See this critical article in Forbes.) The reasoning is that by giving up a portion of streaming revenue, which is bound to grow in the future, the label is essentially paying radio for promotion, plus a royalty for terrestrial play, which might shrink in the future.

Putting aside legal theories, it is deal-making like this which provides the radio industry with a rationale for rejecting governmental attempts to force radio into paying performance royalties to labels and artists for terrestrial play. The most recent proposed legislation is the Free Market Royalty Act, which would force royalty negotiations between broadcast radio and labels. (See RAIN coverage here.) The idea behind the slate of rev-share deals is to stitch together broadcast and webcast into a single royalty-paying framework.

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