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Radio Airplay Royalties: Never Say Never Again

More to come

Leslie Moonves says paying artists for radio airplay is “absurd” but he’s whistling into a stiffening breeze.

Moonves of CBS was quoted widely making his comment at last week’s Radio Show, where industry managers were talking about a deal that record label Big Machine had inked with Entercom along the lines of its similar charter agreement with Clear Channel earlier this year.

The crux of these agreements appears to be that the label and its artists get money from a company’s terrestrial broadcast revenue (a concept that has been anathema — well, absurd — to radio), while in turn the label gets a lower royalty for online streams than it would otherwise charge the broadcaster.

Some observers will argue that the prospect for more such deals relies on whether online radio ever becomes a true profit center; but I think this nascent cooperation is just a harbinger regardless. An important navigation point has been passed, and we will see more such activity soon. You can feel the seas changing direction under and around us on this issue. Radio fought and won its most recent sea battle in Washington on the issue; but that fight could well produce a different outcome next time. Meantime, broadcasters also must build business plans with streaming and other platforms in mind now. They know they no longer operate in a closed media ecosystem. In short, this particular Big Machine will act as a wedge or lever.

I expect more such agreements, with bigger labels getting involved, and a new vocabulary about “mutual benefits” and “friendship between radio and artists.” After years of nose-to-nose confrontation, the two sides, I believe, are realizing that they must cooperate better and find solutions faster, to sail in this new digital multi-platform age. As Entercom’s David Field stated last week, a new business model for radio and the artist/label community “will ultimately enhance the opportunities for all parties concerned.”

Leslie Moonves’ whistling remains sweet music to some in radio but I suspect will sound like an outdated sea chanty very soon.