Clear Channel blazed the trail of company-specific royalty deals between the radio and the recording industries, and now Entercom is the second to hike it. The label is the same one CC dealt with – Nashville’s Big Machine Label Group.
The idea of the Clear Channel/Big Machine deal, and this one as well, is to create a reasonable financial platform for the radio group’s operation in online and other forms of digital broadcasting, in exchange for allowing the label and its musicians to have a piece of the pie generated by the radio group’s over-the-air properties.
The Clear Channel deal with Big Machine was announced in early June. Entercom becomes only the second radio company to engage in such a deal, and as yet there is no second label.
One effect of the original deal between Clear Channel and Big Machine deal was to blunt efforts to pursue some version of a performance rights act on Capitol Hill, as some legislators welcomed the possibility of a business solution to the perennially knotty issue. Nonetheless, two competing bills have been introduced on the topic, one generally favored by broadcasters and internet services such as Pandora, and the other generally favored by musicians.
The NAB has maintained its stance against any kind of radio royalty requirement, but says it has no objections whatsoever to agreements between two businesses.
“This agreement represents a bold step forward to align our interests with those of Big Machine and their artists. While the deal comes with some significant costs and risks, we believe that by working with the labels and the artist community to establish a new business model, we will ultimately enhance the opportunities for all parties concerned,” said Entercom President and CEO David Field. “I also want to acknowledge Scott Borchetta, Bob Pittman and John Hogan for their vision and leadership in blazing the trail that made this deal possible.”
“As great and leading visionaries in the broadcast world continue to look into the future, they are seeing where listeners are going in regards to how radio is being used now and where and how it will be used in the very near future. Among the many choices in the audio entertainment landscape, radio is now portable again thanks to smartphones and soon-to-be ubiquitous Internet streaming in the car”, said Scott Borchetta, President and CEO of the Big Machine Label Group. “David Field and his cutting edge team at Entercom Communications completely understand this vision. I’m honored that they have joined us as partners in growing digital radio as well as compensating the artists that provide great musical content for their terrestrial stations. They have chosen to lead and everyone in the artist and creative community applauds their bold leadership role.”
RBR-TVBR observation: The word glacial comes to mind when we consider the pace with which the one-to-one royalty regimen is being adopted. It has taken over three months to get from deal #1 to deal #2, and out of the entire universe of stakeholders, only three are in the game.
But it is just possible that the concept needed a motion to second to start picking up a little steam, and Entercom has certainly provided that.
However, there are far more questions than answers at the moment. Is this going to be limited to one label and a handful of larger radio groups, or will the snowball start rolling down the hill, gathering up new participants on both sides?
We’ll be watching.