Clear Channel Media & Entertainment chairman/CEO John Hogan speaks with Billboard's Wade Jessen about the company's landmark royalty deal with Big Machine at the Billboard Country Summit. (Photo: Michael Seto)
On the day his company announced a landmark performance royalty deal, Clear Channel Media & Entertainment chairman/CEO John Hogan appeared at Billboard's Country Music Summit in Nashville and explained how the deal benefits the city's music industry and the nation's largest radio company.
Clear Channel believes the deal is good for a healthy country music business, while giving the company the proper incentive to build its budding digital business, Hogan told Billboard senior chart manager Wade Jessen.
"We think its really important that with this new agreement that our business interests are aligned," Hogan said. "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."
In the groundbreaking deal, Clear Channel Media & Entertainment will pay Big Machine Label Group a percent-of-revenue royalty for the performance of its recordings on both terrestrial radio and its Internet radio platform, iHeartRadio. Owners of sound recordings are currently paid for performances on Internet radio services but yet to negotiate a deal with terrestrial radio broadcasters to receive performance royalties.
More predictable digital expenses should help iHeartRadio, but there is little doubt the deal was a strategic, preemptive move by Clear Channel to strike a favorable deal before Congress gets involved. Hogan admitted one of the best things about the deal is that it's a market-based solution that brings together two sides that have long been at odds with one another.
"Well listen, I'm as big a fan as the next guy of elected officials, but I think it's always a little scary when you look for legislative or regulatory solutions to what should be marketplace solutions," he said.
The deal got a nod of approval from country star Dwight Yoakam earlier in the day at the Country Music Summit. During a keynote interview with Billboard Country Update editor Tom Roland, Yoakam said the royalty count offset some of the cost of creating and promoting music and should be considered part of the business model for a business that uses that music to attract advertisers.
"I think that may be good news and maybe a sign of music having a way to maintain itself financially," Yoakam said.
Country labels would be more than happy if Clear Channel could just shorten the time required to move a song up the country chart. The time and cost of radio promotion was again a common complaint at the Country Music Summit. Hogan pointed to a handful of examples of Clear Channel efforts to help develop artists: the artist integration program, the digital artist integration program, a program of world premieres and summits that bring together programmer sand record labels. The integration of terrestrial and digital radio platforms could help, too, Hogan said.
As if paying performance royalties to country recording artists didn't make him enough friends in Nashville, Hogan was absolutely effusive when speaking about country music and its fans. He called country a "tremendous format" and said it has the "most accessible, engaging artists." Clear Channel has 120 country stations as a handful of country-specific stations on its iHeartRadio Internet radio service.
"Radio generally, but country radio in particular, is special because it's a relationship with the listener," Hogan said. "Country radio listeners think of it as their station, and think of it as their artists, and they think of it as part of their family, and as a friend and as a companion. It's the essence of great radio. We have changed the name of the company to Clear Channel Media & Entertainment, but we're powerful believers in the future of radio. Our company is based on the fact that radio is really strong, really powerful."
Hogan began the interview by explaining how the radio grew to 850 owned stations and 238 million listeners. He worked for Jacor Communications when the Telecommunications Act of 1996 relieved ownership rules that had limited the number of radio stations under a single ownership. Jacor quickly grew from 20 to 120 stations and was acquired by Clear Channel in 1999. Clear Channel would make even more acquisitions.
"We all thought it can't get any bigger and go any faster than that," Hogan said. "We were all set to exhale and pretty quickly figured out you had to either keep growing of get left behind."
The industry was flying blind after the Telecommunications Act set off the land rush, he said.
"In the early part of consolidation, there wasn't blueprint. Nobody had done it before. There weren't a lot of examples to follow," he explained. "So we did the best we knew how to do to in trying to bring together these 1,200 different radio stations. There were a lot of stops and starts along the way as we tried to figure out just exactly how to succeed in what was a very different environment. Nobody had owned more than 24 radio stations prior to that and we had an awful lot on our plate."
Hogan is thankful Clear Channel came out the other end of consolidation with "some of the most powerful, iconic brands" in the country, but he admits it wasn't easy. "There's a lot of those years I'd like to forget," he said.