In biggest deal of its type yet, WMG gets paid for all CC use of music, presumably for online royalty discount

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Issue Date: 
Sep 12 2013 - 12:55pm

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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.


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