Big Machine announces second US radio deal that secures an FM royalty

By | Published on Friday 21 September 2012

Big Machine Records

US independent Big Machine has announced a second deal with the US radio industry that wins the label a royalty from the American radio sector’s FM business in return for offering more favourable rates on web ventures.

As previously reported, in the US, unlike in Europe, record labels are not due a royalty for terrestrial radio airplay under copyright law. However, online radio services do need licences from the labels and usually get these via collective rights organisation SoundExchange.

As licensing revenue becomes ever more vital to labels, the American record industry has – albeit so far unsuccessfully – been pushing for a terrestrial radio royalty right to be introduced into US copyright law, similar to that already enjoyed by the owners of music publishing rights. Though there has been considerable resistance from the radio sector.

However, Big Machine chief Scott Borchetta, whose label counts the likes of Taylor Swift and Tim McGraw on its roster, has managed to woo radio chiefs by offering more favourable terms on web licensing than are available via SoundExchange. All the big radio firms in the US recognise that developing successful online music platforms is key to their long term future.

In June Big Machine announced the first such deal had been done with Clear Channel, and this week a second arrangement was confirmed with Entercom.

That firm’s CEO, David Field, told reporters: “This agreement represents a bold step forward to align our interests with those of Big Machine and their artists. While the deal comes with some significant costs and risks, we believe that by working with the labels and the artist community to establish a new business model. We will ultimately enhance the opportunities for all parties concerned”.

Field noted the input of not only Borchetta, but also Clear Channel bosses Bob Pitman and John Hogan, in crafting the template of this arrangement.

Borchetta himself added: “Among the many choices in the audio entertainment landscape, radio is now portable again thanks to smartphones and soon-to-be ubiquitous internet streaming in the car. David Field and his cutting edge team at Entercom Communications completely understand this vision. I’m honoured that they have joined us as partners in growing digital radio as well as compensating the artists that provide great musical content for their terrestrial stations. They have chosen to lead and everyone in the artist and creative community applauds their bold leadership role”.