Clear Channel Responds to FMC’s complaint

Clear Channel responded Friday to FMC’s Request for a Declaratory Ruling, which we filed at the FCC over the chain’s attempts to strip indie artists of performance royalties in exchange for airplay.

Clear Channel officially announced it had revised the language on its licensing agreement (for a fuller discussion see this blog posting). In media reports, Clear Channel officials said, “FMC's allegations of a 'payola-like scheme' are irresponsible and totally false.”

Here is why we made the complaint and why it’s significant.

For many years, FMC and other partner organizations have made the case that it is next to impossible in a consolidated commercial radio industry for independent and local artists to receive significant airplay on broadcast radio stations. This is why we have persistently fought to roll back media consolidation, expand and protect community radio, and work to increase government oversight of payola. For the past five years, we've also talked about an insidious form of structural payola - not the traditional small time bribes that have been around for decades, but a sense that artists and labels had to "play the game" in order to even be considered for commercial airplay. Sometimes it's money, sometimes it's asking bands to play concerts put on by radio stations, sometimes it's other favors. But what everyone in the industry knows is that consolidated radio used their enormous leverage to control what songs would be eligible for airplay.

When the FCC announced a consent decree that wrapped up their response to Eliot Spitzer's New York State investigation, the four major broadcast groups (including Clear Channel) committed not only to increased oversight and internal policing, they also signed the "Rules of Engagement"; a broad statement of principles that clarified the types of behavior in which they would not engage. The implication was clear; because the broadcasters would honor these rules, additional FCC action or increased legislative muscle would not be necessary. But as Senator Feingold alluded to recently in his letter to the broadcasters: “[…] now it seems that simply relying on good faith to end the pervasive practice of payola may not be enough. The major radio companies should reaffirm their commitment to making air play decisions based on artistic merit instead of on the musicians’ or labels’ willingness to provide thinly veiled bribes through payola.”

The entire episode with Clear Channel must be viewed through that lens. This is not an issue about new streaming services or other online applications - this is a question of what hoops Clear Channel would make artists go through in order to have their music even considered for broadcast. The implications could not be clearer: the listening public has a right to expect that Clear Channel (and other programmers) are scouring the music industry, searching out the hot new songs that their listeners would love to hear. Instead, Clear Channel (and the others) uses their extraordinary market power as leverage. They say in effect: “We might consider playing your song on our radio stations, but only if you give us something of value in return.” The fact this is partly in response to the payola settlement demonstrates to what a degree this anti-artist attitude is built into the company's DNA.

The significance of the formal complaint is this: we assumed that once the details of the Clear Channel license were made public, they would quickly back down -- how could they not? But with partner organizations like A2IM in the midst of complicated negotiations about how to implement the other pieces of the payola settlement, we believed that it was important that the FCC clarify that asking artists to waive their royalties, as a condition of being considered for airplay is not kosher for any of the broadcasters to implement.

The fact that Clear Channel changed the language underscores how important it is for the FCC to give legal clarity on this issue. This type of clarity can only come from a regulatory agency that oversees airwaves. It’s obvious clarity is lacking because just two weeks ago, Clear Channel was defending its right to strip indie artists of their royalties.

“But now the FMC says it wants us to pay a royalty every time a listener samples new music from an unsigned artist. That's the surest way to kill this experiment and so I have to ask, Who's really on the side of the artists here?" – “Air Traffic Control,” Billboard, Todd Martens, July 7.

Commercial broadcasters have certain basic laws and regulations that they have to follow. These laws and regulations have been supplemented by the recent "Rules of Engagement". And the independent music community will not stand by idly without asking the Congress and FCC to perform their appropriate oversight duties.