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

image from 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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