Clear Channel Communication and Big Machine Label Group have made a trailblazing royalty deal, according to the New York Times. Under the agreement, the country label – whose artists include Taylor Swift and Rascal Flatts – will collect a royalty when its songs are played on a Clear Channel station. Clear Channel is the biggest radio broadcaster in the U.S. and the deal is unprecedented, marking the first time a record company will gain royalties from radio play. Previously in the U.S., radio companies paid songwriters and music publishers, but not the label.
The deal was reportedly made in anticipation of the further growth of online streaming. Legislation passed in the Nineties allowed labels and artists to collect royalties for online streams, but the more people that listen, the more radio companies have to pay. On traditional radio, stations pay music publishers a set percentage of revenue, but the continued rise of online streaming would force a company like Clear Channel to increase royalty payments. Clear Channel has a current split of 98% terrestrial and 2% online, but the wide gap is expected to change soon. The Times also noted that Clear Channel will likely lose money on the deal in the short term by paying more for current radio play than it will save with online broadcasts.
