Clear Channel Stops Pressuring Indie Bands to Forgo Online Royalties

To settle a payola investigation earlier this year, Clear Channel put limits on gifts it could accept from major labels and made a deal with the American Association of Independent Music (A2IM) in which it agreed to play 4,200 hours of indie music -- defined as coming from labels or artists not owned or controlled by any of the majors. (CBS Radio, Entercom Communications Corp. and Citadel Broadcasting Corp. made the same deal).

Clear Channel made indie copyright holders looking for airplay as part of the agreement to check an Independent Digital Rights Waiver box that forced them to give up online royalties from online simulcasts and even on-demand playback, even if their music was never played by the station. (That takes gumption, settling a payola scandal by implementing another "pay for play" model.

From the licensing agreement (now amended -- see below):

"You grant to Clear Channel the royalty-free non-exclusive right andlicense, in perpetuity (unless terminated earlier by You or ClearChannel as set forth below), to use, copy, modify, adapt, translate,
publicly perform, digitally perform, publicly display and distributeany sound recordings, compositions, pictures, videos, song lyrics,
still images, Your name, picture, portrait, photograph, bandinformation data, graphics, trademarks, text, information, screennames, profiles, newsletters, gig listings, play lists, podcasts,
blogs, broadcasts, messages, software, XML, RSS and links and/or othercontent"

While it was nice of the Clear Channel to include a termination clause, an artist would likely only have cause to terminate the agreement after his or her song had already been used by the Clear Channel in some disagreeable way, so that clause didn't really let the Clear Channel off the hook.

In response, the Future of Music Coalition filed a complaint with the FCC, and Senator Russ Feingold (D-Wisconsin) chided the four payola-settling radio networks, calling out Clear Channel specifically for trying to keep the indies' money.

The pressure paid off. Clear Channel added a new clause in the license agreement on their MP3 upload pages, as reported by Digital Music News, ensuring that indie copyright holders get their digital royalties:

"In the instance when Clear Channel makes the decision to use thecontent for terrestrial broadcasting and, as a result, for simultaneoustransmission through online streaming... Clear Channel shall besubject to and pay for all applicable current and future statutoryroyalties as well as public performance royalties."

Indieartists and labels who upload their tracks for consideration by any ofthese four radio networks should register with SoundExchange within thenext three years in order to claim those royalties.

(Whether the royalty rates should be what they are... well, that's a different story.)

Update: A2IM released a statement about this crediting sixartist groups (including the FMC) for supporting the "Rules ofEngagement" that led to the radio networks pledging to play indie musicin the first place:

A2IM worked with the FCC and four of the largest radio groups on the radio Rules of Engagement ("ROE"), which were announced in March 2007 to ensure equitable treatment at commercial radio for Independent artists and labels. These Rules of Engagement were implemented with the support of six outstanding artist groups:

* American Federation of Musicians (AFofM)
* American Federation of Television and Radio Artists (AFTRA)
* Future of Music Coalition (FMC)
* Music Managers’ Forum (MMF)
* National Association of Recording Arts & Sciences (NARAS)
* Recording Artists Coalition (RAC)

A2IM recognizes that these new processes are just in the early stages of being set up by the radio groups. We are optimistic that the radio groups that agreed to the voluntary radio accord will provide independent, regional, local and unsigned artists with fair and equal access to radio resulting in increased Independent radio play.

The new Clear Channel on-line submission process to submit music for consideration for radio play initially did not offer this parity, it required a royalty waiver for Independents to be able to submit music. Clear Channel has now changed their on-line submission procedures to offer parity and we thank them, as well as the FCC, and the six artist groups who supported the ROE and have been working with A2IM on the issue of radio access.