Clear Channel threatens indie artists

Two weeks ago, FMC sent out a press release and posted this blog entry that documents us catching Clear Channel red handed in an attempt to force indie artists to sign away their future performance royalties as a condition of consideration for radio airplay. What makes this truly unbelievable is the fact that they did this through the very same program that was set up as a condition of their payola settlement.

To back up a step: earlier this year, the FCC finally announced a payola settlement with the four major radio networks. As part of the settlement, the radio networks agreed, among other conditions, to pay a $12.5 million fine and air 4,200 hours of local and independent music on their stations. A pittance, really, but this meant that artists that have long been excluded from the airwaves in favor of payola-driven play lists might finally get a chance at some commercial airplay.

Clear Channel set up an online application for local and independent artists to submit their music for airplay on each of its stations. The applications are on a web page attached to each Clear Channel station website. See, for example, http://www.dc101.com/cc-common/artist_submission Specifically, the contract states (as of 7/06/07):

1. License. You grant to Clear Channel the royalty-free non-exclusive right and license, in perpetuity (unless terminated earlier by You or Clear Channel as set forth below), to use, copy, modify, adapt, translate, publicly perform, digitally perform, publicly display and distribute any sound recordings, compositions, pictures, videos, song lyrics, still images, Your name, picture, portrait, photograph, band information data, graphics, trademarks, text, information, screen names, profiles, newsletters, gig listings, play lists, podcasts, blogs, broadcasts, messages, software, XML, RSS and links and/or other content (collectively, the “Content”) submitted by You to us on this website (the “Site”), […]

“Royalty-free”, “in perpetuity”, “use, copy, modify, adapt, translate, publicly perform, digitally perform”. Looks to us like Clear Channel is asking the artists to sign away their performance royalties just to allow Clear Channel to consider playing their music. Even more ludicrous, they’re using the very structure that was agreed to as part of the FCC-led payola settlement to do it. Most companies would be a bit ashamed of this, but as we’ve learned over the years Clear Channel is not just any company.

Clear Channel’s Executive Vice President and Chief Legal Officer Andy Levin responded to our discovery with an exceptional bit of double talk:

"Where else could a band called Oh Crap! Ninjas get more than 7,000 spins in
just a couple of weeks online? 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”, by Todd Martens, Billboard July 7, 2007.

The snide tone toward a successful indie band aside, negotiating a deal with the FCC to avoid further investigation into payola allegations is hardly an “experiment.” It would be like the FCC calling the $12.5 million portion of the settlement it reached with Clear Channel and other broadcasters a “suggested donation.” Threatening to kill the settlement is a scare tactic.

Levin also seems to imply it would be a financial non-starter for Clear Channel to pick up the costs of the digital performance royalty, so just how much would it cost for the nation’s largest radio chain to stream an Oh Crap! Ninjas song 7,000 times? $10,000? $5,000?

According to current SoundExchange rates, it would be about $7.70.

What’s most troubling is that Clear Channel appears to have learned nothing from the payola scandal. The company’s mindset remains fundamentally the same: musicians owe the chain for airplay. As Levin told Businessweek in a follow up story: “(Musicians) should be paying us to play their music. Unfortunately, that's against the law."

So Andy, who was it again that was on the side of artists?

It’s not illegal for Clear Channel officials to speak their minds. Falsely claiming to speak for artists is galling, but not illegal. Calling a “forced penalty” an “experiment” is a distortion, but doesn’t break any laws. One thing that is illegal is payola. Clear Channel doesn’t seem to want to get it.