Broadcast & Satellite

Thoughts On The Warner Music / Clear Channel Deal [OP-ED by Thirty Tigers’ David Macias]


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(UPDATED) By David Macias, co-founder and president of Thirty Tigers.

The deal between
Clear Channel and Warner Music portends a future where the exposure via public
airwaves and public bandwidth for music will be in large part governed by the
financial relationships between media companies and larger content providers.
This will have a chilling effect on the independent music community from a
business standpoint and will increase the likelihood that most of the music that
you will hear on the public’s airwaves will be music that a corporation feels
can be commoditized.

Let’s imagine two
artists that might be under consideration for airplay by a major radio chain. The
rights holder for Artist A’s recording has a deal in which there is a business
relationship with the radio chain that includes reduced aggregate royalties across
platforms in exchange for more promotion of the act. That’s a reasonable
assumption, but one that is unprovable given the private nature of the deal
between Artist A’s label and the radio chain. Then there is Artist B, who is
independent and has no business understanding with the radio chain. If the
qualitative decision about which song would prove to be the bigger hit is not a
landslide one way or other, who do you think gets the nod? Rinse and repeat
hundreds of times over, and when the companies that have acceded to the lower combined
royalty base have grown their market share through dominating the airwaves, good
luck to the rest of you trying to make your way in the music business. And good
luck to artists trying to negotiate with one of a handful of companies who has
special access to radio outlets. For those of you who are into kicking it old
school, you’ll love a return to the one sided contracts dreamed up by the
titans of the music industry.

If you say,
that’s capitalism, I would remind you that laws have been passed and upheld
over a century to affirm the necessity for a level playing field. That’s an
American value. Capitalism thrives with competition, and the market for
pre-recorded music just got less competitive. And I respectfully suggest that
you ain’t seen nothin’ yet.

Music that is
played through digital transmission is not subject to payola statutes. As
digital alternatives to terrestrial radio continue to gain popularity, the
slight tilt of the table that just happened will gain momentum when these
“special relationships” yield more play than ever on the radio chain’s digital
properties at much lower rates than have been set by the CRB and Sound Exchange.
It wouldn’t surprise me to see other digital outlets brazenly offering
increased exposure on non-interactive streaming outlets for reduced or gratis
royalties. Wait. I think that just happened to me this week.

I don’t even have
a huge objection about the idea of the rates being set where the press is
reporting they are being set (1% for terrestrial, 3% for digital), although
others certainly will. The market, which includes the rational actors that are
Big Machine, Glassnote and Warner Music, seems to be signaling that such a deal
is in the labels’ interests. My only caveat to this, and it’s one that bears
attention, is whether these deals come with promises, implied or overt, that
acceptance of these terms gives these labels preferential treatment when it
comes to airplay while excluding other labels. If someone asks me if I’d rather
make 50 nickels or 10 dimes (metaphor alert – those aren’t the actual rates),
I’ll take the former, especially when I know that the airplay that comes from
50 spins will yield even more due to the sales that come from increased
exposure. If these deals are open to all, then I don’t have as much of a
problem with the market speaking. If these are sweetheart deals to preferred
vendors, then I do. And so should the FCC. These are the public’s airwaves, and
I thought we had answered the payola question pretty definitively, both legally
and societally. One assumes that the lawyers for both companies vetted this
with the FCC. It would be nice to hear something from them about this.

If the market is
speaking and these are the rates that are being paid out to these particular
entities, then I would suggest that we look at these rates as a starting point
for a discussion about a rate for all under a compulsory license. People who
love freedom of markets and freedom of expression should both rally in defense
of the compulsory license, which if not under outright attack, is in danger of
dying from neglect. It’s a fundamental cornerstone of our radio environment,
allowing radio the ultimate freedom to play what they want when they want, as
long as they pay the rights holders a fair royalty. When radio is financially
incentivized to play music only from certain sources, and you’re on the outside
of that, you are less likely to have a career, whether you are an artist or
working in the service of one.

I tend not to
give in to dystopian sentiments about the future of the music industry. I’m
generally pretty optimistic about the state of things. But today is a dark day
in my opinion, unless of course you’re excited about editorial access to public
airwaves and public bandwidth being for sale or unless you are making music
that is produced primarily to enhance shareholder value. If you fall into
either of those categories, congratulations.

MORE: Clear Channel and Warner Music Make Deal For Royalties, Promotion

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4 Comments

  1. Dark as they may be, every day I think about all the great popular music still out there NOT being played on the radio like anything from The Flaming Lips, Wilco, Sufjan Stevens, etc in the last 10 years. I think about it every day. Then I realize that we don’t love in 1995 anymore. We as consumers don’t rely solely on radio and MTV for the majority of new releases. We as musicians and consumers have YouTube, iTunes, Soundcloud, Bandcamp, etc to get our fix and put out our product. The old industry has shrunk and changed hands dramatically and they are only doing what they can to stay as profitable as they can which means relying on the few things they have left to stay in power. They’ve already lost the battle. They can continually try to put the genie back in the bottle, but they can’t. They move too slow and resist change (and true profit) at every instance. In 20 years, hell, in 10 years there will just be that many more industry people who are on our side than the old side. Let them grasp at straws and an already antique and antiquated system. The world is still producing and enjoying great new music without them and it’ll keep on doing so!
    Facebook.com/chancius

  2. there’s no doubt that this is a new kind of Payola for the digital age, and i hope that the FCC takes a long look at this. this will absolutely squelch any possibility of music being played by artists who have not signed with a label that has a “deal” with clear channel. since cc’s only concern about music is how it effects their bottom line, they will have zero motivation or reason to support music by anyone not on a label with a revenue sharing deal with cc. but then again, most artists have given up on commercial radio having any relevance to their careers at all, even on the local level.

  3. Everyone’s pretty naïve here. Majors have always controlled commercial radio.
    The big concern should be majors controlling “ON-DEMAND” streaming and digital policy, which they pretty much do.
    Watch majors pull every digital revenue stream possible. It’s happening. Why do you think majors love streaming?
    Wake up.

  4. There is the organization World Music League, which is a non-structured, open source community for the independent artist, to begin the process of taking mind share from major labels through the grassroots activity of joining in on the discussion of independent artists and the movement to build grassroots support for such artists.
    There are no financial terms, and no commitments – it is a donation to the music world, to feature and discuss music, artists, producers, and to create a scene rather than try to fit into the one that is manipulated.
    Not everyone will become listened to or heard, but everyone has a voice – World Music League helps to consolidate an open source voice of the independent artist, to provide a power of groups rather than a bunch of individuals.
    We are looking at a convention in diffeent parts of the country, to stimulate discussion, develop a political action group, and to grow our inlfuence in music. Radio is dead, and advertisers are shifting their funds to online, social, and new media. World Music League intends to be available for the independent community

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