Yee Haw!  Clear Channel goes country in a royalties deal with Big Machine Label Group – a Nashville, TN country music label group with a client list that includes Rascal Flatts, Reba McEntire, Tim McGraw and Taylor Swift.  Announced on June 5, 2012,  beginning immediately, Clear Channel will pay royalties to performing artists from play on both their traditional stations as well as royalties they will continue to pay for digital.

“For years, record companies and media companies have looked for a new way to do business together that would bring our interests into line,” BMLG President and CEO Scott Borchetta said in a press release. “In Clear Channel, I found partners who shared my big-picture view of how we could structure an agreement to benefit all involved.”

http://www.investorplace.com/2012/06/taylor-swift-will-now-get-paid-for-this/

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The artists agreed to a cap on their royalties earnings from play on Clear Channel’s websites and simulcasts on iHeart Radio based on a fixed percentage of ad revenue.  This deal allows Clear Channel to grow its digital product with a sustainable business model that reins in the costs associated with digital.

“”Someone has to go first, someone has to take a risk,” said Clear Channel CEO Robert Pittman. “If digital grows a lot, this will be a good deal. It’s a gamble. But you win nothing if you don’t take a chance.”

Now, 98% of Clear Channel users listen on terrestrial radio, and the balance listen digitally.”

http://online.wsj.com/article/SB10001424052702303506404577448893122187210.html

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“The sound recording performance royalty — which is also known as the artist performance royalty and is not to be confused with the songwriter performance royalty — is something that record labels and artists have been fighting to obtain from U.S. radio for decades. Currently, in the U.S., they have only been successful in winning such a royalty in the digital radio space…..

…..The reason why only one participating label has been announced thus far apparently is related to the fact that it was Big Machine Label Group president and CEO Borchetta who brainstormed the business model and brought it to Clear Channel, which wants to start small with the process and see how it goes.”

http://taylorswift.com/forum/taylor-news/1881001

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I like the structure of this deal.  If I understand it correctly, the cap is based on a portion of revenue generated, so the more revenue that is generated for Clear Channel then the bigger the royalties payment to the artists.  Please correct me if I’m wrong.  I’ll be reading up on this to see how it progresses.  Could this be the impetus to expand digital radio into profitable numbers and a sustainable business model?

I’m not a big country music fan so I’m unfamiliar with any country stations in the Bay Area.  I thought I’d read, recently, that the one country station this area had was reformatted.  I wonder what impact this deal will have on Bay Area radio.

Although Clear Channel is still one of the media giants that has taken over our local radio landscape, their management seems to be forward-thinking in both their long-term vision and, at least, locally, their humane treatment of our former KGO hosts after the Dick-ey brothers of Cumulus Media came to town and ruined local radio.

Again, as a reminder, do NOT listen to any Cumulus radio station .  Do NOT give them any data on the PPM to show up as ratings or shares or cume.  Do NOT listen to KGO, or KFOG, or KNBR.  Don’t give those Dick-eys on more dime or one more second of your time.  Let their shareholders know they are in a sinking ship.

Finally, I found this article that explains music royalties.  Not sure when it was written, but it has some good information on how the royalties system works in the music industry.

http://entertainment.howstuffworks.com/music-royalties6.htm

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