Big Machine and Clear Channel Brave a New Frontier

by Kira Grunenberg

I’m sure it would be lovely to think of the music industry as one incessantly creative party. This would be a happy but myopic view of things. There are several subsets of professionals, from the artists themselves, to engineers, managers, publishers, producers, distributors, and so on that divide the business. Not to say that all these groups are contrarily at each others’ throats, but each has a different set of specialties and accompanying different set of professional and monetary goals. In this way, sometimes the groups end up ruffling a few feathers among themselves in order to try to attain what’s best for their particular interests.

Today, artists are still attempting to find their best method of navigating the royalty/copyright/accessibility landscape. The constant, quickly enacted changes to playback platforms and artist rights makes finding an optimal position extremely difficult. One specific sub-group of the industry that has long worked against artists is terrestrial radio. Up to now, artists have had to fight tooth and nail as it is, to obtain payout for sound-recording royalties, though only for plays on digital radio.

At present, the payout structure for artists is a pay-per-play model and, for the current year, the rate stands at an almost non-existent, (but thankfully mandatory), $0.002 per ‘artist performance.’

Looking to be catalysts for change between these two groups, Clear Channel Communications and Nashville-based Big Machine Label Group, have started an official partnership, developing an agreement to change how and when the artists and the label are compensated. As quoted in Billboard.biz, Clear Channel CEO, Bob Pittman, explains that the new structure will treat the radio business “holistically.” Big Machine will receive a percentage rate based on advertising revenue brought in against music airplay, regardless of whether the broadcast is transmitted via radio, mobile phone or through a computer.

As reported through an official press release, John Hogan, Chairman and Chief Executive Officer of Clear Channel Media and Entertainment, puts this payment expansion in perspective: “98 percent of our listening is terrestrial broadcast and [just] 2 percent digital.” The agreement would also have payments made straight to Big Machine, eliminating the middle-man, performing rights organization SoundExchange.

This bold approach to royalties is being viewed cautiously but optimistically from both sides, as Big Machine is the only label Clear Channel has agreed to partner with for now, if only to see how the whole ordeal fares in the short and long term. Big Machine Label Group’s President and CEO, Scott Borchetta, elaborated on his positive outlook for not only the details of the money but for a growth to digital radio and the alliance in general, as also reported in the above 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. Not only does this partnership enable Big Machine to participate in terrestrial broadcast revenues, but we are also helping to grow digital radio — a great opportunity for all of us and a breakthrough opportunity for Big Machine artists.”

There is something to be said for ‘going where no part of the U.S. music industry has gone before’ and simultaneously strengthening artist pay. If all goes well, Big Machine and Clear Channel could be setting up a trend that could drastically shift both the symbiosis of industry relationships and consumer platform preference. For now though, only time will tell the true receptions of their choice.

Kira is an old school music nerd with a love for all things creative; always searching for music’s common ground. She graduated with an M.A. in Performing Arts Administration from New York University. Drop her a tweet @shadowmelody1

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