Head of CBS: “Paying Artists for Radio Play Is Absurd…”

A one-word description for the next few years of radio?

Chaos!

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Thursday morning: Big Machine Label Group inks another momentous, direct licensing deal with Entercom Communications Corp., one that covers both terrestrial (analog) and digital (online, mobile) radio streams.  Just like the groundbreaking Clear Channel partnership inked in June, this means royalties will be directly paid to Big Machine, all through privately-negotiated terms.  This is a deal done in their treehouse, and not subject to statutory, government-mandated rates.

All of which represents a massive, disruptive threat to SoundExchange, a bureaucracy currently bogged in bad accounting, unpaid holding balances, and a legal battle with one of its top contributors.  Meanwhile, Pandora is choking to death, perhaps a commentary on the broader prospects for digital radio formats.  “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,” Clear Channel CEO John Hogan recently told an audience at the Billboard Country Summit in Nashville.

These aren’t handshakes happening in some corner.  Instead, these are some of the largest music media companies on the planet.  Big Machine is home to mega-artists like Taylor Swift and Tim McGraw; Entercom is one of the largest conglomerates in the United States with 100+ stations across 23 markets, including Boston, San Francisco, Seattle, Denver and Portland.  Which means, of course, Big Machine gets lots of airplay on those 100+ stations, not to mention the Clear Channel stations.

But wait: not every big dog wants to play catch.  That includes CBS chief executive Leslie Moonves, who considers rotation on radio a privilege, not a right.  And definitely not something he’s willing to pay for.  “The idea that we have to pay them to put their music on our radio stations is absurd,” Moonves recently told a group of radio executives at a National Association of Broadcasters conference in Dallas, as quoted by RadioInfo.

Which means, in 2012, the radio terrain looks something like this:

(1) Some mega-broadcasters, like CBS Radio, will fight tooth-and-nail against any attempt to charge royalties on recordings.

(2) Others, like Clear Channel and Entercom, will entertain directly-licensed deals.  But these deals could take considerable time to complete and could exclude vast numbers of artists in the process (remember, Big Machine gets lots of preferential rotation treatment here).

(3) These deals could also severely marginalize companies like SoundExchange.

(4) The major labels will continue to fight in Congress for a federally-mandated royalty on radio-streamed recordings.  They will probably fail.

(5) Companies like Pandora will continue to pay royalties that broadcast radio does not.  And, struggle for survival in the process.

(6) Satellite (ie, Sirius XM) radio will continue to pursue directly-licensed arrangements, while litigating against the likes of SoundExchange and A2IM.

(7) And, broadcast radio will still be playing the same, 40 songs you know and love…

37 Responses

  1. Payola BIll Paley

    Interesting that the labels are now the ones wanting to get paid for radio play. Remember the good ol’ days when the labels paid the radios stations for plays? oh wait, that still kind of happens…

    • music fan

      Of course big broadcasters like CBS want to pay as little as possible. Moonves pays for his television programming and other content. Why not some fees for the artists for music? Foreign artists in nations like Canada, UK, Japan and almost every other industrialized nation get public performance royalties.

      For radio to be able to do this and get off is ridiculous, but also terrible for artists. American artists are unable to also get their public performance royalties from abroad because the US doesn’t reciprocate. So it makes many artists poor. Companies like CBS or Clear Channel need to pay.

      • Esol Esek

        Companies like CBS and Clear Channel need to be broken up by the government, and Moonves belongs in a breadline. He puts his ugly wife on Big Brother. Such an elitist/nepotist.

      • nathan rollins

        The music business is getting more ridiculous everyday..that’s why people like master-p,had to change the game ooops,racket

  2. 0.2 Chainz

    If you’re Led Zeppelin or Bob Seger or similar, then radio owes you.

    Otherwise, pray you get rotation. Or if you got rotation, thank whatever God is up there that you happen to be getting radio play on someone like CBS Radio.

  3. Visitor

    Les should write and produce his own music then. Or at least play only recordings made by CBS Inc.

    I am sure more people will be tuning in for that.

    • Visitor

      If they could only play artists that they personally sign, they would. The ONLY thing stopping them from doing this already is anti-trust law.

  4. Food For Thought

    Mr. Moonves’ comment reveals the lack of respect for musicians and their contribution to the billions in revenue that music programming generates at radio and elsewhere. Does Moonves find it ridiculous to pay the NFL for their product? to pay Ashton Kutcher to be on a sitcom? to pay Morley Safer for his work on 60 Minutes? Of course not.

    Now, count to 10 and before you’re done you’ll no doubt read about how musicians are lucky to get airplay and how radio airplay provides promotion, blah, blah, blah. Everything said about the benefit that artists receive from radio airplay can be applied to the NFL, to Ashton and to Morley but Moonves and his kind would never dare. They pay those everyone who appears on their airwaves – including songwriters – EXCEPT for the artists who perform the music that powers their radio stations.

    It’s patently unfair – underscored by the fact that the U.S. is the only industrial nation on the planet that doesn’t compensate performers – and it is a matter of when, not if, this will be corrected.

    • Me!

      Those are horrible analogies. NFL players and Ashton Kutcher don’t get paid direct royalties from TV networks unless they are creators or writers. Those that perform on TV are paid by the producers of the content, whether that be the NFL or FOX Television. Those performers are basically works for hire. If the television networks had to pay a royalty directly to every face on TV they wouldn’t be able to exist.

      • Food For Thought

        …and the performing musicians would get paid performance royalties by their labels or by SoundExchange. Creators get paid myriad ways and the NFL is paid differently than Morley Safer who is paid differently than Ashton Kutcher. The point is that CBS pays the creators of every iota of content on their airwaves EXCEPT for the creators that perform the music that they program on their terrestrial radio stations.

        • Econ

          You still don’t get it.

          CBS pays the other creators for exclusivity. Paul Shaeffer’s band IS paid by CBS, in part because they are playing FOR CBS. Their labor is what is for sale, not their copyrighted work. That is a completely separate deal, usually a set period of exclusivity. Why the hell would I pay more than a token amount to play the exact same records 12 other radio stations in town can play? There’s no value there. Fox and CBS both pay to broadcast NFL games, but they get exculsive rights to each specific game they air. (Not to mention the fact that the market finds almost zero value in football game repeats.)

      • ben

        Actors don’t get royalties? That’s news to me. Maybe that’s true now, but you often see documentaries that point to the terrible rare cases where the actors didn’t get royalites as being the exception. I really don’t know, but I do know that I get royalties as an “actor” when I sing a on a TV commercial. I am paid as an off-screen actor. Are you sure? Now, these royalties come from the actors’ union. Maybe the union collects from the ad agency rather than the network paying directly, but collecting back-end for acting is not unusual.

        • Ramdon Guy

          You’re not receiving royalties as an off-screen actor, you may have received a check as one, but you’re royalties are likely a result of someone negotiating a percentage of the royalty in your compensation. Further, you were likely considered a “work for hire” employee, in which the law does not provide a royalty interest absent a contrary agreement in the contract.

          “ME” said it best, do you think Television would survive if every face on camera received a royalty from the final production?

  5. ListenerToReality

    Wow, are these folks really that clueless? Radio is dying! Kids dont listen to the radio, radio does not have the same power to “break” an artist it once had and yet they’re still clinging to the ideal that they are the king makers… Perhaps among a few genres and demos its still doing well but the music industry no longer needs radio for their promo. Have they not heard of the Internet and the Mobile web? jeezzz

    We already know how this plays out folks. Just look at the demise of the lables and the death of the retail business. Radio may still own a certain demographic but even that is dying. Talk radio is king, music is on life support.

    Flash forward 8 years and hardly anyone will listen to terrestrial radio.

    • buckeyeshine

      of course he says this because he PYS THE RADIO MILLIONS ( out of the artists “promotional budget) to get crap songs played. it’s called PAYOLA as everyone on this site already knows.

    • Supers

      You are incorrect. There’s a very large amount of people that listen to the radio while driving. It is true that very few people listen to the radio otherwise but nearly everyone does it in their car.

      • ListenerToReality

        Terrestrial radio is dying. No differnt than broadcast TV – very few people watch TV over the air these days.

        All you have to do is ask your friends and your kids – do they listent to commercial radio? Many kids dont even know what it is! They will try and skip over a song they dont like…

        I stand by my statement that music radio will be virtually non-existant in 10 years as streaming becomes ubiquidious and wireless broadband covers the globe.

        And yes, pay-to-play still exists, but thats because folks in the radio and lables are in denial about their power and their position.

  6. dhenn

    So he’ll pay millions to tv show creators to air their shows but not $.09 to the creator of a song he plays on his stations, which bring in millions in advertising.

  7. Tony Gottlieb

    The inherent problem is not with determining a reasonable approach/approach to this issue. The real concern here is that any solution which involves statutory reform, which is not fully supported by the NAB, stands zero chance of passage.

    Political leadership, beholden to and vulnerable to the media ownership’s bias during political campaigns, cannot afford to take a stand and remain in office.

    Apparently, Les would prefer renegotiating the blanket performance licence consent decree. Because it looks to me tha tis the only option and it’s becoming apparent that labels would support it too.

  8. speaking of money

    Last.fm reveals £2.84m loss – bulk of users still in UK, despite CBS ownership

  9. Since 1994

    People still listen to the radio? What rock station do they listen to in NYC? What rock station do they listen to in Atlanta? Radio is dead.

    Here lies radio – it met the internet and died.

    • Food For Thought

      Spot on. I listened to the “rock” radio station in NYC (Q104.3) on my car stereo on the way home this evening. They played The Who, Bob Dylan, Stealers Wheel, The Beatles, Billy Joel and 38 Special. Oooh, all that free promotion! With a few more spins, they might actually become someone.

  10. Wolf

    This article really should have been headed:

    Head of CBS: “Paying Artists is Absurd…”. That always seems to be their driving philosophy.

  11. Radio will be dead soon

    Once all new cars have Wifi hot spots built into them (which Ford anounced it is doing in 2013) gone will be terrestrial radio and the major labels. A fact every label CEO is well aware of.

  12. Coyote

    The real issue goes beyond money here…the real issue is editorial control of what is being said by musicians in their lyrics. Ever since Carl Sandberg and Woody Guthrie the words have become a message speaking directly to the people. Now with CBS and other such organizations in the pockets of the corperations that increasingly control our lives and our government they want to stop freedom of speech without stepping on the first amendment. Do you think an artist like Sting could break through on todays radio if he were a complete unknown? His lyrics would be deemed too controversial as would so many others. When you are towing the line to make a living by being on the radio are you going to do what you are told? How much do you hear new music rocking the boat…has Rage Against the Machine appeared on any I heart radio? It’s nice to get paid but they want to control the content by starving it into submission.

  13. Dacesita

    LOL. New business model for musicians!

    1) Pay the middle man to get on a major radio station (up to 7 digits, true story)

    2) Don’t get royalties

    3.1) Expose your work via radio so people stream your music for free

    3.2) Most likely expose it to prison population and truck drivers as the music is being played between 12 and 6 am

    3.2.1) Thus most likely don’t expose your music to any reasonable audience

    4) Sometime down the line maybe make some money when and if they come to your gig.

    5) Sell merch

    Bingo!

    Fuck it. lol