Friday, July 13, 2007

Clear Channel's Greatest Hits: Taking on Clear Channel's royalties grab

On Monday, we promised readers a week full of blog posts about Clear Channel forcing local and indie artists to give up performance royalties in order to be considered for airplay on their stations.

Each day we’ve written about Clear Channel’s actions and why – contrary to their claims – they are not on the side of artists. If you’re new to the posts, please scroll down to have a look at what we’ve written.

You’ll also remember we promised you (and Clear Channel) a special surprise at the end of the week. Here it is:

Today, the Future of Music Coalition and Media Access Project filed a formal complaint with the Federal Communications Commission requesting clarification that Clear Channel’s practice of forcing local and independent recording artists to waive potential royalties as a condition of having a song considered for broadcast airplay is tantamount to demanding payola.

To backtrack a little: This spring, the FCC and the four major radio broadcasters settled the payola investigation by agreeing to pay $12.5 million in fines. As part of a side deal, the broadcasters also agreed to a set of “rules of engagement” that included airing 4,200 hours of local and indie music.

Just a little over three months after that settlement, FMC found that Clear Channel is engaging in a different type of pay-to-play: waiving performance royalties in consideration for airplay.

In our request for a declaratory ruling, we are specifically asking the FCC to rule that:

(the) waiver of digital performance rights in exchange for broadcast carriage of music constitutes consideration within the meaning of Sections 317 and 507 of the Communications Act and 47 CFR §73.1212, and, consequently, an artist waiving such performance rights is a sponsor of the broadcast of such broadcasts and must be identified as such.

So what does that mean without the legal gobbledy gook? Surprisingly enough, it’s not illegal for a record label to pay a radio station to play a certain song. However, it is illegal for a station to play a song it has accepted some type of payment for (be it money, a gift or “valuable consideration”) without announcing who has sponsored the song. This is the legal definition of payola.

We believe that Clear Channel is asking for a “valuable consideration” by requiring artists to give up their valuable performance royalties for consideration. Since asking for local and indie artists to give up something valuable, Clear Channel would be breaking the “sponsorship” rules unless it announced that these indie songs were “sponsored by” the band in question, as the Communications Act requires.

For years, FMC has contended that access to commercial radio is roughly equivalent to a poker game – you can’t buy your way on the air, but if you don’t ante up you have no chance of gaining airplay. In FMC’s view, Clear Channel is simply extending this practice in a brazenly transparent way that clearly violates the letter and spirit of the payola settlement.

In a music industry that’s rapidly moving towards a “celestial jukebox” where music fans will have always-on access to vast amounts of music performance royalties will become an important revenue stream for musicians and songwriters. We need to nip Clear Channel’s actions in the bud before it undermines future royalties for all artists.

Here’s a link to the complaint.

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