Paying Artists for Traditional Radio Play Could Help Clear Channel Battle Pandora

Clear Channel Deal Delivered Lower Digital Royalties for IHeartRadio

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A revenue-sharing accord between Taylor Swift's label and Clear Channel Communications, the country's biggest radio station owner, may become a template for the music industry, according to artist manager Irving Azoff.

Taylor Swift
Taylor Swift

Don Henley and other musicians may enter into similar agreements to get paid for songs played over the air, said Mr. Azoff, a Clear Channel director and chairman of Live Nation Entertainment who manages the Eagles' drummer and lead vocalist.

Clear Channel will pay Big Machine Label Group and its artists -- including Ms. Swift, Jewel, Tim McGraw, Rascal Flatts and Reba McEntire -- for songs played on the air or over the web, the companies said Tuesday in a statement. It marks the first time musicians and their labels have collected royalties from traditional radio broadcasters.

As part of the agreement paying artists for airplay, Clear Channel negotiated "more realistic" digital royalty rates, Mr. Azoff said. "Unrealistic rates on the digital side were choking the ability to expand digitally for radio companies," he said.

"We're trying to convince labels to enter into a direct deal because we can't get legislation passed," Mr. Azoff added. "Clear Channel is first of these deals."

Clear Channel operates iHeart Radio, which competes with Pandora for online listeners. Unlike Clear Channel, however, Pandora does not own terrestrial radio stations, so it isn't clear whether it could arrange a similar deal for lower digital royalties.

Pandora co-founder Tim Westergren was scheduled to testify today before Congress, seeking lower royalty rates for streaming. Pandora, iHeart Radio and other online music services pay rates set by the Copyright Royalty Board, part of the Library of Congress.

In addition to his role at Live Nation, Mr. 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.

"Today, 98% of our listening is terrestrial broadcast and 2% digital -- with record labels and artists only paid for the 2%," said John Hogan, Chairman-CEO of Clear Channel Media and Entertainment, in a statement announcing the new accord. The agreement expands label and artist participation to terrestrial broadcast revenue from just digital in one comprehensive framework, he said.

Clear Channel, acquired in 2008 by private equity funds Bain Capital and Thomas H. Lee Partners, owns 850 radio stations serving 150 cities, according to the statement.

-- Bloomberg News --

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