RIAA chief applauds Clear Channel-Big Machine royalty deal

The recording industry’s top lobbyist gave a thumbs up to radio giant Clear Channel Media’s unprecedented deal with country music label Big Machine (Taylor Swift, Tim McGraw) that will pay performers royalties when their songs are played on the radio.

“We’re obviously delighted that the biggest radio group acknowledged that something should be done,” said Cary Sherman, chairman and CEO of the Recording Industry Assn. of America. Sherman made his remarks at a congressional hearing called “The Future of Audio” held Wednesday by the House Subcommittee on Communications and Technology

The music industry and radio broadcasters have fought for almost a century over paying artists royalties when their songs are played. Songwriters and music publishers receive royalties from the radio industry, but not the performer (although often the performer and the writer are one and the same).

While Sherman applauded the Clear Channel-Big Machine accord, he and others testifying at the hearing said an industry solution, not individual deals between companies, is needed.

“Terrestrial broadcasters have an inexplicable ‘free ride’ when it comes to performance royalties,” said jazz musician Ben Allison, who is also the governor of the New York chapter of the Recording Academy, the organization that puts on the annual Grammy awards. “This makes corporate radio the only business in America that can legally use another’s intellectual property without permission or compensation.”

Broadcasters disagree and don’t want government involved in the royalty debate. In a statement issued Tuesday after Clear Channel announced its deal with Big Machine, the National Assn. of Broadcasters said the agreement shows there is no need for intervention.

“NAB remains steadfastly opposed to a government-mandated performance tax on local radio stations,” the association said. The radio industry typically argues that the free promotion performers receive from radio play helps artists build followings and increase record sales.

The Clear Channel pact with Big Machine is evidence that the radio company is making a big bet on its online operations. While performers do not get royalties from over-the-air terrestrial radio, they do from web-based music services. Clear Channel, through its I Heart Radio app, has made online distribution for its radio stations a priority.

“This is a big step, but we think this investment is an opportunity worth taking to align our interests in all of our revenue streams and grow digital listening to its full potential with record labels and their artists as our partners,” Clear Channel Chief Executive Bob Pittman said in a statement.

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