Clear Channel, Big Machine Unite for Big Machine Radio
Clear Channel, Big Machine Unite for Big Machine Radio

Big Machine Label Group, home to such stars as Taylor Swift and Tim McGraw, has followed its landmark deal with Clear Channel by striking a deal with Entercom Communications that allows Big Machine artists to participate in Entercome's terrestrial broadcast radio revenues.

"This agreement represents a bold step forward to align our interests with those of Big Machine and their artists," said Entercom President and CEO David Field in a statement. "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 went on to acknowledge Scott Borchetta, President and CEO of the Big Machine Label Group, Bob Pittman, CEO of Clear Channel Media, and John Hogan, Clear Channel Media & Entertainment chairman and CEO "for their vision and leadership in blazing the trail that made this deal possible."

Announced in June, Clear Channel's deal with Big Machine was presented as a way for the communications company to build its digital business by escaping higher statutory webcasting rates. "We think its really important that with this new agreement that our business interests are aligned," Hogan said at the Billboard Country Summit in Nashville in June. "When our interests are aligned, and when we have a very predictable, transparent business model, we are much more motivated to grow the digital business."

While Big Machine artists will likely get less on the digital side, they will get a percent-of-revenue royalty for performances on both terrestrial and digital platforms. And there is little doubt Big Machine artists will reap benefits from the publicity they generate through these partnerships.

"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", said Big Machine's Borchetta said in a statement. "David Field and his cutting edge team at Entercom Communications completely understand this vision. I'm honored 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."

Entercom is a publicly traded company (NYSE: ETM) and one of the five largest radio broadcasting companies in the U.S. It has 111 stations in 23 markets including San Francisco, Boston, Seattle, Denver, Portland, Sacramento and Kansas City. The company had revenues of $382.7 million and net income of $68.5 million in 2011.

Artists with Big Machine's wholly owned labels who will benefit from this agreement include Big Machine Records artists Taylor Swift, Tim McGraw, Rascal Flatts, Edens Edge and Ella Mae Bowen and Valory Music Co. artists Reba McEntire, Justin Moore, Brantley Gilbert, The Mavericks and Thomas Rhett.

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