Why Broadcaster Deals With Record Companies May Be a Good Thing
Last week, we wrote about the recently announced deal between Big Machine Records and Entercom Communications. The day after we posted that article, Clear Channel announced another label deal – this time with Glassnote Entertainment Group, the home of bands including Mumford & Sons and Phoenix. As with its Big Machine deal, the public releases suggest that the label agreed to lower digital performance royalties in exchange for a royalty on over-the-air performances by the company. What impact do these deals have on the threat of a broadcast performance royalty, and why do the parties enter into these deals?
When the Entercom deal was discussed at the NAB Radio Show, the host of the session asked for a show of hands from broadcasters in the audience who were absolutely opposed to any performance royalty – and about a quarter of the hands in the room went up. This is probably reflective of concerns that the break in the almost unanimous opposition of radio broadcasters to an over-the-air performance royalty for record labels and musicians could mean that the broadcast performance royalty (what used to be referred to as the “performance tax”) would become inevitable. Will these deals embolden the recording industry to once again push Congress to move on the stalled effort to institute a performance royalty? Perhaps not.
At a Congressional hearing soon after the announcement of the original Big Machine-Clear Channel deal, Congressional Representatives were asking witnesses from the broadcast and music industries if the deal reflected a marketplace solution to the royalty issue, obviating the need for any government involvement. And that was certainly the message of the NAB at the Radio Show – these deals are unique deals by companies that can uniquely benefit from them as they have a large digital presence, not a template for universal extension to all broadcasters. Based on our summary last week, it seems that the potential for savings by the broadcaster on their digital operations are evident, but why would the record companies agree to such a deal? There are several benefits that are evident. First, the royalties on the over-the-air revenues, even though smaller percentage-wise, are probably larger in absolute terms than the drop in the digital royalties, as digital revenues are, at the current time, a small fraction of over-the-air revenues. But this may well change in the future. For now, though the absolute dollars are probably greater for the record company that signs a deal like this.
But there may be other benefits to the record companies as well. If the cost of playing the music by a particular label is less than the music from other labels, wouldn’t it be natural for that music to be played more often by the broadcaster? If so, the label benefits by giving its artists more promotional exposure to its artists. Potentially, the deals could have also provided other promotional consideration that we will see rolled out in the future.
There may be other long-term benefits for the record companies. If this were to become a widespread model, the US might come into accord with much of the rest of the world in paying artists and labels for the use of music by over-the-air broadcasters. If that were to happen, overseas royalties that have been withheld (or made harder to retrieve) from overseas collection organizations could start to be released to US artists and labels. Those collection agencies don’t always pay US artists without some machinations as these countries’ artists get no royalties from over-the-air performances the US.
Many have also suggested that should these deals spread and become standard, there might actually be more total royalties paid to the artists and labels as more webcasters launch services, encouraged that they might actually be able to make a profit. In recent years, publishing companies that receive royalties from the use of music but charge far less than the labels for their interest in the music have been among the bright spots in the music industry. Could this be a template for a change in the way that business is done by the labels as well? (We’ll write more on this topic in coming days in connection with legislation introduced the week before last by Congressman Chaffitz on digital music royalty parity in the US and in connection with other digital music royalty issues).
But even if the deal does not have an impact on the performance royalty, could the agreement otherwise change the equation on royalties for the use of music by broadcasters? While this deal is but one agreement between one broadcaster and one record company, it is an example of a broader trend toward direct music licensing for digital uses. In 1998, Congress provided a one-stop shop for music licensing for non-interactive digital music services including webcasters and satellite radio (that “stop” being SoundExchange). These royalties are paid to SoundExchange, and set by the Copyright Royalty Board (“CRB”). Broadcasters and others are accustomed to paying for the public performance of musical compositions (through royalties paid to ASCAP, BMI and SESAC) – with the combined amount of those royalties usually in the neighborhood of 5% of revenue. In the digital realm, the royalties paid to SoundExchange for the use of the sound recording (for which over-the-air broadcasters pay nothing) have been extremely high. For services like Pandora, that royalty is a minimum of 25% of the company’s revenue. For most webcasters, including broadcasters who are streaming their over-the-air signals, the per-song, per-listener fees can eat up all of the revenues of their digital services (see our summary of the royalty rates here). These royalties have caused many to re-evaluate their Internet radio strategies – with some broadcasters abandoning streaming altogehter.
A deal like the Big Machine agreement, if it spread to other services and labels, could well lead to a new royalty model. In setting rates, the CRB looks to establish rates that reflect what a willing buyer and a willing seller pay in the marketplace. In past royalty proceedings, that willing-buyer, willing-seller price had to be estimated, as there were no real deals to use as a benchmark. And the estimates all went against webcasters. With a deal like that with Big Machine, and the deals that Sirius XM negotiated with certain independent record labels (which Sirius argued was impeded by those representing the royalty-collectors who feared the precedent), the pro-record company outcome of the CRB proceedings may well be changed if these deals can be shown to be representative of the real value of the public performance of the sound recording.
All in all, the deal between Clear Channel and Big Machine may not be what broadcasters feared – a concession on the over-the-air royalty – but instead may have positive benefits for all broadcasters in the digital world, setting a precedent for lower royalties in future proceedings. Of course, we’ll all have to wait to see what details emerge on this deal and any other similar agreements that may be in the works. But, with the next round of proceedings to set webcasting royalties starting in 2014 and running through 2015 (to set the rates for 2016-2020), the time is now for these deals to be made. The digital future for broadcasters may what is negotiated.
Article send in by Keith Bradford for possible publication,
received from Country Entertainment USA
MUSIC IS THE SOUNDTRACK OF LIFE AND IN GOD WE TRUST
Allen Foster: From Feasterville, Pa, my friend Allen, who’s an editor, songwriter, pianist & teacher has posted a very different review (of Katie Ferrara) in a story format. It was so fun to read… check it out: Click here Allen also made a video of his 10-year old talented student (Drew Taylor Hirsch) singing Ivy’s EDGE OF THE OCEAN. Drew played all the instruments except drums. Click to watch video Plus his music is being featured in 2 apps: Blastwords for ipad and FlickIt Alley (Universal App). BlastWords: Click here FlickIt Alley: Click here A1Foster@aol.com
Doris E. Hays: From Peoria, IL, Doris is a prolific songwriter who has a new CD out with Keith Bradford called: Biography of a Song, Volume 2. This CD is unique as every song is introduced by Keith Bradford and tells the story behind the song before the song is actually played. This is Doris E. Hayes second storybook CD narrated by Keith Bradford. I listened to all 10…All are great, but my personal faves are: My Ireland – An Angel Earning Her Wings – An Old Country Tune – Take it To The Lord & Stars in Your Crown! Email Doris: firstname.lastname@example.org
DJ Dean Wilt: From NY,DJ Dean, who owns Country Gold Jukebox(a PalTalk.com online radio show), is known for his recitations and his latest one THE PRICE OF INNOCENCE is getting lots of airplay worldwide. He wrote it after he learned of the terrible tragedy at Sandy Hook, CT. It is very inspiring and well-done! email@example.com
DJ Mike Stevenson: From Smithville, TN, Mike has Great Country Radio (GCR)and gives out annual awards (of which I’m a proud recipient this year). Upon hearing of the recent tragedy in CT, he immediately started a program that will enable artists and promoters to donate items to help support those in a crises situation of that nature and more important to take steps that it doesn’t happen again. DJ Mike recently had a special show (which he’ll have annually) for our mutual friend Fred Leonard, who passed away a year ago January. Prayers are requested for DJ Mike as he has been hospitalized several times in the past month with complications from his diabetes. Use 2nd address if 1st one doesn’t work. firstname.lastname@example.org@gcr.comcastbiz.net
Mike Johnson: From TN, my friend, Mike, has two great things for me to write about this time: First is that on 7 January 2013, the Library of Congress Performing Arts Reading Room acquired “I Just Wanted To Be A Songwriter, a Mike Johnson Music Anthology” for its growing Mike Johnson collection. Janet McKee started the ball rolling back in 2007 when she acquired 114 of Johnson’s yodeling songs for the Recorded Sound Reference Center. Mike’s Label (Roughshod Records) also produced a CD album for James Adelsberger (BACK HOME AGAIN & THE HOLY RIVER). These songs can be heard: Click here Email Mike: BlackYodelNo1@aol.com
NOTE TO ARTIST/SONGWRITERS:
If you have single CDs and/or CD albums that you like to get played at a college radio station, please send them to DJ David Pearce,WQSU-FM; Susquehanna University; Selinsgrove, PA 17870. Please note that David can’t play MP3, so you’ll need to send your CDs snail mail..
SOCIAL NETWORKS AND YOUR MUSIC:
Important Note about Reverbnation: I dont think I’d recommend the Reverbnation though. We had a mis-understanding in early December and they locked me out of my account (that I’d paid for in advance until I did things their way. Well I complied immediately as I’d spent a lot of time adding my songs & lyrics at their site (although I disapproved of their tactics). That’s been several months ago and I still can’t get into my account. You can go there, but I can’t add or change songs, etc.
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Some have been telling us the 10 minute segments are the highlight of their day and that it would be a pity if they disappeared. The likileakes although sometime controversial are all based on research and observance of Keith Bradford’s daily experiences. If you have a local radio station that you think would be interested in broadcasting the daily Likileakes send us the information and we will be sure to contact them.
Bizarre foods: There is a popular show on television that deals with bizarre foods that people eat and enjoy. I must admit I am not in a big hurry to try some of the bugs and creepy crawlers that they say are delicious.
I have always wondered who the person was that caught a lobster and thought that creature would be good to eat. Obviously a lobster is not the prettiest thing in the ocean to look at.
The mere fact that you must cook it in boiling water while it is alive sounds gruesome to most of us. How about oysters on a half shell that so many people indulge in?
No matter how much hot sauce you pour on them, this is not something I want sliding down my throat.
There are many other delicacies that call the ocean home which I won’t list at this time but a final favorite on the menus of upper end restaurants is calamari. For those of you who don’t know calamari is a fancy name for squid.
When I was a kid most of my neighbors that went fishing at the beach used squid for bait. I don’t know about you but I don’t want to eat fish bait for dinner. Furthermore those folks that enjoy worms and snails fixed in various ways can have my share.
If you are an Independent Artist and would want your songs featured on one of “Keith Bradford’s Likileakes Radio Shows” you are most welcome to contact him at email@example.com This show is broadcast worldwide on various internet radio shows and you could be the featured artist on one of those special shows.
In einer unserer beliebten Fernsehsendungen geht es um bizarres Essen, das Leute zu sich nehmen und das sich großer Beliebtheit erfreut. Ich gebe zu, ich selbst habe es nicht eilig damit, Käfer und sonstige Kriechtiere zu mir zu nehmen, um herauszufinden, ob sie schmecken.
Ich habe mich schon immer gewundert, wer wohl auf die Idee gekommen ist, einen Hummer zu fangen und gedacht hat, der würde sich sehr gut zum Verzehr eignen. Schließlich ist der Hummer nicht gerade das hübscheste Tier, das im Meer lebt.
Und die Tatsache, dass man den lebend in kochendes Wasser schmeißen muss, weckt bei vielen Menschen Unbehagen. Wie sieht es da mit den Austern aus, die auf einer halben Muschelschale liegen und sich ebenfalls großer Beliebtheit erfreuen? Egal, mit welcher Würzsoße das übergossen wird – ich will das nicht zum Runterschlucken in meine Kehle gleiten lassen.
Da gibt es eine ganze Reihe von Meeresfrüchten, die ich jetzt nicht alle aufzählen möchte. Aber eine dieser Delikatessen, die im gehobenen Gastronomie-Bereich gern angeboten werden, ist „Calamari“. Für diejenigen, die nicht wissen, was das ist: es handelt sich um Tintenfisch.
Aus meinen Kindertagen weiß ich, dass Nachbarn an den Strand zum Fischen gingen und am liebsten Tintenfisch als Köder benutzt haben. Ich weiß ja nicht, wie es Ihnen geht. Aber ich will keinen Köder auf meinem Teller zum Abendessen haben. Und diejenigen, die Würmer und Schnecken lieben, können gern meinen Teil davon haben.
© Patty Patrick
If you have a prayer or a thought that you want to mention here or send to someone who you believe is deserving please use my column to reach special people who would go out of their way to say a special prayer on your behalf for that someone you care about – Marty Martel
.WHISNews21 Prayer Line and thoughts for Wednesday February 27, By Marty Martel.
Please keep in your thoughts and prayers the following:
Dawn Sears and Thomas Sellers. Thomas is the manager of John A’s restaurant and will be undergoing surgery on Monday, Mar. 4th. Dawn is going through health issues that need our prayers.
Our prayer lines for Jimmy Holt are being answered. Jimmy is doing better.
Marty, the doctors at John Hopkins have given a very bad report to my friend Angie Honeycutt, who started out with pancreatic cancer. Her husband recently flew her up there. Please put a prayer request out to all your friends for God to do a miracle healing on Angie if it is in His will. He has the final say so and His will supersedes all the doctors He has created. – Blessings, Marilyn Moore
Our Father Who are in Heaven,
Hallowed by Thy Name, Thy Kingdom come,
Thy Will be done, on earth as it is in heaven,
Give us this day our daily bread and forgive us our trespasses
As we forgive those who trespass against us,
And lead us not into temptation, but deliver from all evil.
If you have anyone you would like to send a prayer out to please mail them to
for inclusion in to WHISNews21 weekly prayer line initiated by Marty Martel
in the interest of goodwill to all in need of a little help by the way of a prayer