Head of CBS: "Paying Artists for Radio Play Is Absurd...

From Digital Music News

A one-word description for the next few years of radio? 

 

Chaos!

 

Thursday morning: Big Machine Label Group inks another momentous, direct licensing deal with Entercom Communications Corp., one that covers both terrestrial (analog) and digital (online, mobile) radio streams.  Just like the groundbreaking Clear Channel partnership inked in June, this means royalties will be directly paid to Big Machine, all through privately-negotiated terms.  This is a deal done in their treehouse, and not subject to statutory, government-mandated rates. 

 

All of which represents a massive, disruptive threat to SoundExchange, a bureaucracy currently bogged in bad accounting, unpaid holding balances, and a legal battle with one of its top contributors.  Meanwhile, Pandora is choking to death, perhaps a commentary on the broader prospects for digital radio formats.  "When our interests are aligned, and when we have a very predictable, transparent business model, we are much more motivated to grow the digital business," Clear Channel CEO John Hogan recently told an audience at the Billboard Country Summit in Nashville.  

 

These aren't handshakes happening in some corner.  Instead, these are some of the largest music media companies on the planet.  Big Machine is home to mega-artists like Taylor Swift and Tim McGraw; Entercom is one of the largest conglomerates in the United States with 100+ stations across 23 markets, including Boston, San Francisco, Seattle, Denver and Portland.  Which means, of course, Big Machine gets lots of airplay on those 100+ stations, not to mention the Clear Channel stations.

 

"The idea that we have to pay them to put their music on our radio stations is absurd..."

 

But wait: not every big dog wants to play catch.  That includes CBS chief executive Leslie Moonves, who considers rotation on radio a privilege, not a right.  And definitely not something he's willing to pay for.  "The idea that we have to pay them to put their music on our radio stations is absurd," Moonves recently told a group of radio executives at a National Association of Broadcasters conference in Dallas, as quoted by RadioInfo. 

 

Which means, in 2012, the radio terrain looks something like this:

 

(1) Some mega-broadcasters, like CBS Radio, will fight tooth-and-nail against any attempt to charge royalties on recordings.  

 

(2) Others, like Clear Channel and Entercom, will entertain directly-licensed deals.  But these deals could take considerable time to complete and could exclude vast numbers of artists in the process (remember, Big Machine gets lots of preferential rotation treatment here).  

 

(3) These deals could also severely marginalize companies like SoundExchange. 

 

(4) The major labels will continue to fight in Congress for a federally-mandated royalty on radio-streamed recordings.  They will probably fail.

 

(5) Companies like Pandora will continue to pay royalties that broadcast radio does not.  And, struggle for survival in the process.

 

(6) Satellite (ie, Sirius XM) radio will continue to pursue directly-licensed arrangements, while litigating against the likes of SoundExchange and A2IM.

 

(7) And, broadcast radio will still be playing the same, 40 songs you know and love...