While Warner is the first major record label to sign such a broad royalty deal its arrangement with Clear Channel is already being looked to as a template for a broader detente between the record companies and broadcasters.But it may not be a template Pandora can follow.
The battle over online and offline music licensing may never end but it seems to be entering a new phase. Yesterday, radio station group Clear Channel unveiled a new deal with Nashville label Big Machine (Taylor Swift, Tim McGraw) that for the first time will pay artists performance royalties for broadcast radio play in exchange for lower royalties for Internet play. Since the dawn of radio, broadcasters have had to pay royalties to songwriters and publishers for on-air play but not to record labels and performers, on the theory that on-air play promoted record sales. In the Digital Millennium Copyright Act, however, Congress granted performers royalties for Internet play, which are set by the Copyright Royalty Board. That unequal treatment of broadcast and Internet play continues to be a sore point for Internet-only broadcasters like Pandora, which has been lobbying Congress for more equal treatment. The deal between Clear Channel and Big Machine, however, suggests the market may be moving toward more equal treatment anyway, even without congressional action.