Business Matters: As Clear Channel Lands Royalty Deal, Pandora Speaks Up About Webcasting Royalties

Glenn Peoples
·4 min read
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Pandora Speaks Up About ‘Very High’ Webcasting Royalties

— On the day Clear Channel announced a groundbreaking performance royalty deal with Big Machine Label Group, Pandora CEO Joe Kennedy was reiterating a message about its own performance royalties. Pandora pays too much for stream music.

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Clear Channel’s John Hogan Discusses Big Machine Royalty Deal at Billboard Country Summit

“We believe the rates we pay are unfairly high, because by radio standards the rates we pay are very high,” Kennedy said at the annual Needham Internet & Digital Media Conference in New York. He came back to the subject later in the hour-long conversation.

“There’s certainly never in the entire history of radio royalties in this country or around the world, that an entity that pays a percentage of revenue that we have effectively been paying,” he said. But Kennedy wasn’t done. “The rates are so high, we are the only successful player in this market,” he noted minutes later.

Clear Channel has the same sentiment. At this week’s Country Music Summit, Clear Channel Media & Entertainment CEO/chairman John Hogan explained that the company’s deal with Big Machine will give it the incentive to grow its digital business.

“We think its really important that with this new agreement that our business interests are aligned,” Hogan said. “When our interests are aligned, and when we have a very predictable, transparent business model, we are much more motivated to grow the digital business.”

In other words, Clear Channel will trade a share of its broadcasting revenues in order to get a webcasting royalty rate lower than the one set by the Copyright Royalty Board in 2010. The current royalty for a webcasting operation of a terrestrial radio station is 0.2 cents per stream. Clear Channel did not reveal details of its deal with Big Machine but did state the deal pays a percent-of-revenue royalty across both broadcast and digital performances. A similar deal between labels and the National Association of Broadcasters was said to be on the table but never came to fruition. Labels have pushed Congress to enforce a performance royalty but it hasn’t happened yet.

Clear Channel’s direct negotiations with Big Machine — and presumably with other record labels in the coming months — could help Pandora. The second-biggest webcasting company in the U.S., according to Triton Media measurements, feels webcasting royalties are high enough to merit navigating around statutory webcasting royalties and doing its own deals. Clear Channel’s negotiated webcasting royalties are presumably lower than those set by the CRB, and they’re low enough for Clear Channel to want to invest more in its digital properties.

But here’s where the stories diverge. Clear Channel can negotiate lower webcasting royalties because it holds a terrestrial radio card that Pandora doesn’t have. The pitch to labels is something like, “Give us a break on digital, we’ll pay you for terrestrial performances and you won’t have to wade through the morass at Capital Hill.” Thus, Pandora is effectively penalized for being a pure-play webcaster who can’t cut a deal on terrestrial royalties.

“The other significant payers of Internet radio royalties are the broadcasters who are able to kind of subsidize their entry into Internet radio because they don’t have to pay royalties at all on their broadcast business and even though their businesses are quite small compared to ours,” Kennedy said.

Mog Working With Ford
— Chalk up another digital entry into the automobile. Music subscription service Mog now works in Ford vehicles that have the Sync on-board entertainment system. Mog connects to Sync through the Mogi Phone app via a USB port in 2012 Sync-enabled cars (Fiesta, Fusion, F-150, Super Duty, E-Series, Mustang and Expedition). The app’s features are actually transferred to the in-dash screen, and voice commands make for easy navigation.

Ford’s Sync App Link, the system that links mobile apps to Sync, integrates with a number of music services, including Pandora, iHeartRadio, Slacker, Stitcher and NPR. Mog works only with the iPhone but the other apps work on both iPhone and Android devices. Pandora and iHeartRadio work via Sync on BlackBerry devices, too.
( GigaOm)

Follow Social Commerce Trends? Check out Wanelo
— If you follow social commerce trends, check out Wanelo. It’s like Pinterest but it’s all about selling things.

“Wanelo is a movement of regular people who help each other find things they like, and most of these things are affordable,” Wanelo founder/CEO Deena Varshavskaya explained to VentureBeat.

There’s a lot of clothing and an obvious lack of music-related products, but it’s not a big stretch to imagine band T-shirts and unique LP and CD products being shared on Wanelo one of these days.
( VentureBeat)

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