Clear Channel Makes Revenue-Sharing Deal With Big Machine

Clear Channel said Tuesday that it has reached an innovative deal with the Big Machine Label Group that will enable the record company and its artists to share in terrestrial radio revenue.

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Big Machine is a Nashville-based label that's home to Taylor Swift, Tim McGraw, Rascal Flatts and others.

For more than a century, terrestrial radio broadcasters have been paying statutory license rates to songwriters through their publishers, and recently, digital radio broadcasters have been paying for the rights to stream recordings online. Despite some legislative push to allow record labels to collect money from terrestrial radio too, there hasn't been significant progress on making that happen.

The new agreement means that Big Machine will be able to participate in advertising revenue from Clear Channel's terrestrial radio service on top of its digital broadcasts. As for what Clear Channel gets, the deal appears to allow the radio giant to bypass SoundExchange -- which sets rates for digitally streamed music that some have deemed to be expensive -- and come to a more cost-effective way of growing its digital business.

“Today, 98 percent of our listening is terrestrial broadcast and 2 percent digital -- with record labels and artists only paid for the 2 percent,” says John Hogan, chairman and CEO of Clear Channel Media and Entertainment. “This new agreement expands label and artist participation from just digital to terrestrial broadcast radio revenue in one comprehensive framework that will give all of us a great incentive to drive the growth of the digital radio industry and allow everyone to participate financially in its growth."

Big Machine is responsible for collecting the revenue from Clear Channel and sharing profits with their artists.

"Not only does this partnership enable Big Machine to participate in terrestrial broadcast revenues, but we are also helping to grow digital radio -- a great opportunity for all of us and a breakthrough opportunity for Big Machine artists," says Scott Borchetta, president and CEO of Big Machine.

There's no word yet on what percentage of revenue that Clear Channel will give Big Machine, how it's calculated or whether there are other deals in the works with other labels.