A revenue-sharing accord between Taylor Swift’s label and Clear Channel Communications Inc. (CCMO), the biggest U.S. radio station owner, may become a template for the music industry, according to artist manager Irving Azoff.
Don Henley and other musicians may enter into similar agreements to get paid for songs played over the air, Azoff, who manages the Eagles’ drummer and lead vocalist, said yesterday in an interview.
Clear Channel will pay Big Machine Label Group and its artists, including Swift, for songs played on the air or over the Web, the companies said today in a statement. It marks the first time musicians and their labels have collected royalties from traditional radio broadcasters.
“We’re trying to convince labels to enter into a direct deal because we can’t get legislation passed,” said Azoff, a Clear Channel director and chairman of Live Nation Entertainment Inc. (LYV) “Clear Channel is first of these deals.”
Clear Channel, based in San Antonio, operates iHeart Radio, which competes with Pandora Media Inc. (P) for online listeners. Pandora co-founder Tim Westergren was scheduled to testify today before Congress, seeking lower royalty rates for streaming.
As part of the agreement, Clear Channel negotiated “more realistic” digital royalty rates, said Azoff, who sold his Front Line Management business to Live Nation last year. Live Nation, based in Beverly Hills, California, is the largest concert promoter and ticket seller.
“Unrealistic rates on the digital side were choking the ability to expand digitally for radio companies,” Azoff said. The rates were also “holding back consumers. We learned from Napster, that’s a bad thing,” he said.
In addition to his role at Live Nation, Azoff is the personal manager of the Eagles, Christina Aguilera, Neil Diamond, Van Halen and Steely Dan, according to a biography posted at the company’s website.
Nashville, Tennessee-based Big Machine, owned by Scott Borchetta, and Clear Channel didn’t provide other financial details. Vivendi SA (VIV)’s Universal Music Group distributes Big Machine releases. Artists participating in the Clear Channel accord include Tim McGraw, Rascal Flatts, Reba McEntire, Jewel, and the Mavericks, according to the statement.
Pandora, iHeart Radio and other online music services pay rates set by the Copyright Royalty Board, part of the Library of Congress. While publishers and songwriters are paid for airplay, recording artists get nothing.
Clear Channel, acquired in 2008 by private equity funds Bain Capital LLC and Thomas H. Lee Partners LP, owns 850 radio stations serving 150 cities, according to the statement.
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