Clear Channel agree to first US sound recording radio royalty

Clear Channel, the biggest radio company in the US with 850 stations, has entered into a landmark agreement with country music label Big Machine which will see the broadcaster pay a royalty for the use of sound recordings on terrestrial radio channels for the first time. In the UK these royalties are collected for the performance of sound recordings in all media by Phonographic Performance Limited (“PPL”) and whilst newer media in the USA such as satellite, internet and digital radio attract a royalty (currently collected by SoundExchange), US copyright law does not recognise any right to collect payments from terrestrial stations. Terrestrial broadcasters do though have to pay the “PRS” royalty for the use of songs (usually by way of blanket licences with ASCAP and BMI).

After pressure from the US Congress, a reluctant radio industry did start to negotiate a compromise with the record labels, but the talks collapsed. The broadcast lobby remains powerful in Washington although its clear some politicians are keen to introduce a system more favourable to record labels and recording artistes which would mirror the music publishing position.

Big Machine, headed Scott Borchetta, have seemingly been able to use the fact that a royalty does attach to internet communications of their sound recordings to lever Clear Channerl into making a payment for terrestrial uses too, although Billboard reports the deal is based on a share of advertising revenue across all of its radio output, rather than a ‘needletime’ or ‘per play’ royalty.

Speaking about the new deal at Billboard's Country Music Summit, John Hogan, CEO of Clear Channel's Media & Entertainment business said "We think its really important that with this new agreement that our business interests are aligned. 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"

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/clear-channel-s-john-hogan-discusses-big-1007241352.story

US Moves to Leave "Axis of Evil" poses PPL a problem

Slightly after the event, it is admitted, but the February introduction of a Performances Rights Act in the US Senate may, if the Act is passed, throw Phonographic Performance Ltd (PPL) into something of a quandary here in the UK.

The Chairman of the US Senate Judicial Committee, Sen. Patrick Leahy (any relation to Dick?) introduced legislation which will oblige AM and FM radio stations to make licence payments for the broadcast of sound recordings and the recorded performances thereon. China, Iran and North Korea are as out of step as the USA in this respect and clearly the USA wants to join the "good guys".

Applauded by Tony Bennett (swoon) and Bono, such a new income stream would provide useful income to US recording artists still waiting to recoup their advances under their recording agreements (here in the UK this income is not applied to recoupment but paid direct to artists).

The UK joined other Rome Convention signatories in 1964 and initially record labels in the UK (via collecting society PPL) shared this type of revenue with performers by private agreement. In 1996 performers became entitled to this equitable remuneration for broadcast and public performance of their recorded performances by law - albeit asserted against the producer as opposed to the user (as is the case in other jurisdictions). So PPL, which had distributable revenues of £110.3 million in 2008, shares the income between its record label members and thousands of UK musicians and performers.

Natch, the Recording Industry Association of America (RIAA) welcomed the initiative, highlighting the international inequity of US labels and performers not being able to collect overseas royalties for music that is, after all, the core business of music stations. Songwriters and music publisher are paid via ASCAP, BMI and SESAC - but not record companies or performers. The popularity of US artists worldwide prompted the RIAA to label the lack of such a law "an inequity that costs American artists tens of millions of dollars each year". And there's the rub.

While PPL merrily collects from broadcasters in the UK and shares the revenue with UK performers, what becomes of the revenue from the licence fees that are attributable to the broadcast of work from US labels and artists? Is it distributed in the UK to UK beneficiaries? Or perhaps the licence fees only represent UK radio stations' broadcast of repertoire by UK labels and artists?

So, if the USA comes onstream with this new right, will licence fees to broadcasters go up because additional monies will have to be collected and paid to US labels and artists? My, how the broadcast community in the UK will love that! Or, will UK labels and artists be asked to sacrifice a percentage of their income so that it can be paid across to the new, true rightholders across the pond?

Does PPL have a plan?