PRESS RELEASE

Clear Channel strips local, independent artists of digital performance royalties

Move runs counter to spirit of the payola settlement

Washington, D.C. - You remember several years ago, in 2005, former Attorney General, now New York Governor, Eliot Spitzer caught several major labels and major radio companies with hands in each others’ cookie jars engaging in payola-- receiving payments from record companies to play certain records?* Sure you do, his investigation garnered national headlines and resulted in fines and penalties from several major labels that exceeded $30 million.

Earlier this year, the Federal Communications Commission joined the fight announcing a settlement with Clear Channel and three other major radio networks after an investigation into the same payola allegations raised by Spitzer’s investigation.

As part of the settlement with the FCC, the radio networks agreed, among other conditions, to air 4,200 hours of local and independent music on their stations. This meant that the talented artists that had long been excluded from the airwaves in favor of payola driven play lists were finally getting a small bone.

(FMC never understood the logic that playing popular indie bands like the Shins and Arcade Fire on the radio was any kind of penalty…but heck, 4,200 hours of good music on the radio is better than none so we weren’t complaining.)

It turns out, we should have been. Recent revelations show that Clear Channel has decided to use its olive branch as a cudgel to force local and independent artists to give up hard won performance royalties as a condition for consideration for play. (Hear the story on NPR: http://www.npr.org/templates/story/story.php?storyId=11250011).

Per the settlement, the broadcaster set up an online application for local and independent artists to submit their music for airplay on each of its stations. The applications are on a web page attached to each Clear Channel station web site (i.e., www.dc101.com/cc-common/artist_submission).

The application requires the artist to approve a licensing agreement that (oops) does away with their digital performance right. In other words, Clear Channel is asking the artists to sign away his or her right to get paid a royalty when it digitally broadcasts the artist’s work.

How does this show contrition for allegedly engaging in an illegal practice?

It doesn’t.

“This is outrageous,” said FMC Executive Director Jenny Toomey. “This is like the fox getting caught in the hen house a second time and arguing that he shouldn’t get in trouble because he was leaving the hens alone…he was just eating all their eggs.”

A further irony is that Clear Channel’s move to require artists to sign away their performance rights is kind of redundant.  You see, In the United States the commercial broadcasters have managed to avoid paying performance royalties for over the air broadcast of music.  This means that when a song is played on the radio, only the songwriter is paid whereas in 75 other countries both the songwriter and the performer are paid.

More outrageously, in 1995, when the Digital Performance Act was passed establishing a performance royalty for digital radio The National Association of Broadcasters, the lobby group for the radio companies, successfully negotiated an exemption from having to pay the royalty rate on H.D. radio streams.  That’s right, the richest, largest and most powerful broadcasters -- including Clear Channel -- secured an exemption for themselves. Other digital broadcasters such as Live365, Sirius and XM pay the royalty.

You may wonder why Clear Channel is asking artists to sign away rights they normally don’t have to pay because of their already negotiated exemptions. Well it may just be because Clear Channel’s move comes as strong momentum is developing in the artist community to demand that radio broadcasters come in line with the rest of the world and finally pay a public performance royalty for terrestrial and digital radio. 

The effort to extend the public performance right to over the air broadcasts is going to be a huge struggle, but there is broad consensus in both the artist and the technology communities that the digital performance exemption that the broadcasters enjoy is patently unfair. In other words, if the digital performance right exists, everyone should pay it, particularly the wealthy broadcasters.

Forcing artists to sign away their rights in a application document is just one of the many ways that Clear Channel is helping the artist community demonstrate just how greedy big radio has become.

Now why is it that you can’t afford a performance right again?

Footnote:

*FMC has long fought to rid the airwaves of payola. Our recent study “False Premises, False Promises” documents the role that radio consolidation has played in concentrating radio access into the hands of a very few gatekeepers leaving it vulnerable to financial influence. In this study we identified Clear Channel as the largest and most influential gatekeeper with hundreds of radio stations under their control.

About the Future of Music Coalition
Future of Music Coalition is a national non-profit education, research and advocacy organization that identifies, examines, interprets and translates the challenging issues at the intersection of music, law, technology and policy. FMC achieves this through continuous interaction with its primary constituency - musicians - and in collaboration with other creator/citizen groups.

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