Friday, September 13, 2013

Broadcasters Prefer ‘Paying Now, Not Later’

Until now agreeing to pay artist performance royalties that U.S.-based artists have been clamoring for and been rebuffed on since the 1950's -- when combined, the indie deals amount to small potatoes in the overall scheme of things, according to Billboard.

The National Assn. of Broadcasters has successfully beaten back every legislative attempt by record labels and artists to force broadcast radio to pay such an artist performance royalty, something that is paid in the rest of the world, but is only paid here in digital broadcasts.

In doing this and 12 other recent deal with indie record companies, Clear Channel Media Holdings CEO Bob Pittman, was going against the grain in the radio industry, but Billboard report Pittman says he has made these deals because he wants to build a successful digital broadcast business, something that the current rate structure prevents, according to him.

The statutory payment rate for webcasting is $0.0022 per song for a compulsory license is predicated on a per play rate per listener. Since radio can't control how many listeners will tune in, it can't predict how much will have to be paid out. Pittman says these deals give him a predictable cost structure that allows him to build an economically feasible business model.

According to sources, the deals pay 1% of advertising radio from terrestrial broadcast as artist performance royalties, 2% for digital webcasting and the equivalent to, but not exactly, the statutory rate for a pureplay license for its iHeartRadio Pandora-like service.

Broadcasters like Clear Channel and others like Entercom and Beasley, prefer to make deals now instead of legislation-imposed mandatory rates later.

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