Tuesday, July 10, 2007

Clear Channel's Greatest Hits: How Clear Channel rules the airwaves and why it’s bad for indie musicians

As we wrote about yesterday and in previous weeks, Clear Channel is attempting to strip indie artists of performance royalties in order to be considered for airplay on its stations.

As part of a settlement with the FCC following an investigation into payola allegations, Clear Channel and other major broadcasters agreed to air 4,200 hours of local and indie programming. Clear Channel set up a page on its stations’ web sites that allowed indie artists to submit their music for airplay, but required them to check a licensing agreement that waives the artists’ performance rights.

Incredibly, Clear Channel has responded to allegations of payola by instituting a new type of pay-to-play; the system means artists are trading something of value – their performance royalties – for consideration for airplay. It’s simply payola under a different name. The arrogance is astounding, but speaks volumes about the power the nation’s largest broadcaster wields and why it’s bad for indie musicians.

To fully understand why Clear Channel is attempting to strip indie artists of performance royalties, it’s important to understand the company’s rise to power as the nation’s largest broadcaster and its primary motivation – selling ads, not making great radio.

"We're big. We're bad. We're back. We're rich," bragged former Clear Channel chief Randy Michaels to the Cincinnati Enquirer.

Clear Channel’s ascent came faster than Wal-Mart’s. Clear Channel owes its dominant position to an obscure clause in the 1996 Telecommunications Act, which eliminated a provision that had previously capped the number of stations any one company could own at 40 nationwide.
What followed was an unprecedented era of consolidation in radio. After the elimination of the national ownership cap, radio station owners went on a buying spree, with Clear Channel growing from 40 stations to over 1,200 in less than five years. Since then, the chain has decided to go private and sell hundreds of stations, but still remains the biggest player in the broadcast industry.

The Telecommunications Act and subsequent ownership consolidation had a significant impact on the kind of radio we hear today. As FMC’s 2006 study “False Premises, False Promises” demonstrated:

 Just fifteen formats make up more than 75 percent of commercial airplay.
 Important genres such as jazz, bluegrass, folk and new rock have little presence on the commercial dial.
 Individual stations in the same format owned by the same chain have strikingly similar playlists. In the case of Clear Channel stations in the same format, playlists overlapped on about 55 percent of songs.

As entertainment lawyer Michael Guido told Frontline about the state of consolidated radio:

“In the early days of the music business, the record business, you could find a DJ in Cleveland, like Alan Fried, or in Buffalo, who would fall in love with a record, start playing it, people would react to it, and you could start a record off that way. It's much more difficult to do now with two or three conglomerates controlling all the radio formats.”

That’s largely because you can’t find the local DJ anymore at Clear Channel stations. To fatten its bottom line, Clear Channel embraced the now infamous practice of “voice tracking,” beaming programming prepared by a DJ in a centralized station to stations across the country, and programming playlists regionally. The result: homogenized track lists and the elimination of hundreds of local DJs familiar with musicians in their local music scene. If Clear Channel really cared about artists – especially indie and local ones – it wouldn’t eliminate its primary contact with them.

Rather, Clear Channel’s motivation has always been the dollar, as employees have attested.

“The ‘Cheap Channel’ nickname really fits because that’s the bottom line; they don’t care about their employees,” a Clear Channel employee told Salon in 2001.

Clear Channel has also advocated for record labels to directly pay for airplay of songs – the ultimate triumph of money over music. For years, airplay was determined by a type of payola system. Records labels paid independent promoters to promote certain records to radio stations. The promoters would in turn pay radio stations annual fees and give them perks if they added the songs to their playlists. Clear Channel’s plan would have cut out the middle man.

A columnist at the Houston Press summed up Clear Channel’s position on selling airtime to the highest bidder:

“In the days of truly competitive radio, most stations would have avoided such an arrangement because of the loss of credibility it brings…. The prevailing school of thought at Clear Channel appears to be that radio stations are mere supermarkets, with airtime a commodity to be bought and sold like shelf space. In this view, songs are commercials for the CDs that carry them.”

It’s also important to understand the relationship between big radio conglomerates and major record labels: they reinforce each other. There are more radio stations on the American radio dial now, and yet space on the airwaves has become scarce. This is partly because some formats are programmed so narrowly and partly because some formats with different names overlap considerably in terms of their programming choices. Fewer and fewer songs reach the charts, due to the predominance of “crossover” hits. This increases the cost of promotion for musicians as it becomes more expensive to capture the attention of program directors. Musicians need more resources than ever before to break through the radio redundancy to get on commercial radio forcing them to seek out major label deals.

In the self-reinforcing structure we have described, music industry resources benefit a small number of musicians. Radio stations play songs by a smaller number of musicians. A few “winners” among musicians reach the top and make a great deal of money, but the dominant players like Clear Channel get paid either way while having have shut out many other musicians from both major labels and radio. It is hard to see how Clear Channel is "really on the side of artists."

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