Clear Channel radio strikes up second combined FM/digital deal with US indie

By | Published on Monday 1 October 2012

Clear Channel

American radio major Clear Channel last week announced a second deal with a US independent record company that will see the broadcaster pay the label a royalty for FM airplay in return for more favourable digital rates.

Under American copyright law radio stations are not obligated to pay labels a royalty for playing their recordings on terrestrial radio (as they are over here). As licensing revenues have become more important to labels much lobbying has gone on by the record industry to change this system, though so far unsuccessfully, the US radio industry being pretty powerful in Washington.

However, broadcasters do need to pay royalties to the labels on their increasingly important digital services, and this is generally done via the statutory rights body SoundExchange. This created an opportunity in the eyes of Scott Borchetta, the boss of indie label Big Machine. He did a deal with Clear Channel earlier this year, in which the radio group agreed to pay the label a royalty on recordings played on FM in return for more favourable online rates. It’s thought both are based on a share of ad revenues (whereas SoundExchange rates are charged per play).

And now the Glassnote Entertainment Group has struck up a similar deal. Billboard quotes the company’s founder and CEO Daniel Glass as saying: “We built Glassnote to be a next generation music company that embraces change, including evolving technologies. One of our passions is aggressively finding new and innovative ways to make our artists’ music and information more available than ever to their fans. It is no secret of our respect and love for radio. This partnership aligns our business interests more closely with Clear Channel, and we’re excited about being part of the drive to grow digital radio faster and bring all of its benefits to music fans”.

Meanwhile Clear Channel boss Bob Pittman said in a statement: “Not only will this agreement expand [the Glassnote] 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”.

As previously reported, another US radio firm, Entercom Communications, announced a similar licensing arrangement with Big Machine last week.