iHeartmedia (formerly Clear Channel)’s Dominant Warner Music Group Deal Puts Industry on Notice

by Kevin Ross - Posted Thursday, September 19th, 2013. Category: URBAN

worldFor the past week, I have been debating about saying something concerning the new deal that iHeartmedia (formerly Clear Channel) has made with Warner Music Group, the smallest of the label giants compared to Sony and Universal Music Group. Without question the deal is meant to send a signal to the other labels about the benefits of signing on with iHeartmedia (formerly Clear Channel) but the other two labels according to sources, have previously refused the deal and in all honesty for the sake of the industry, we hope they continue to refuse. We’re not crazy about the terms of what the deal means to the industry, especially the artists, label employees, major and independent labels, DJs and radio employees in general. There is LOT that fills the middle between the labels and the radio stations, all of which is the fiber of the entire industry, marketing, promotions, concerts, djs, PDs, research (well we can certainly do away with research especially on the urban side), PPM etc. This giant carrot that iHeartmedia (formerly Clear Channel) is now dangling over the industry should put everyone working in the industry on alert. When the corporation is directly connected to the label what does that mean for the middle? A whole lot and a whole lot of nothing. iHeartmedia (formerly Clear Channel) is offering payment in terms of royalties to WMG’s artists via the 850 terrestrial stations by paying 1% of advertising for broadcasts and 3% for digital this includes a payment upfront, WMG will also get special product promotion and artists appearances hence the iHeart-Music fest. For this, iHeartmedia (formerly Clear Channel) receives a reduced rate on digital streams going from 22 cents to 12 cents per 100 stations. By the same token, we get what iHeartmedia (formerly Clear Channel) is doing too. The industry is going completely digital and there are some pretty impressive new music services popping up everyday that are directly connected to the fans. iHeartmedia (formerly Clear Channel) is trying to get on board before the shift is complete. That shift could greatly affect terrestrial radio.

iHeartmedia (formerly Clear Channel) explains that they are not in violation of payola laws… I’m going to pass on the industry’s dirtiest word by simply responding… and I just changed my name to Rumplestilskin and my uncle Leroy Johnson was one of the original 7 dwarfs when they had their biggest hit “Do I look like I take my head off at night and put it on the End Table?”  Corporations are working to eliminate the middleman in the industry and it’s going to bite them in the ass.

The industry is a well-oiled machine with integral parts working in fair and mostly unbiased concert to help make artists… major. We’re not talking about what goes in and what comes out we’re  talking about how it’s processed. This kind of deal is completely unfair to new artists and artists who don’t sign to WMG or it’s subsidiary labels, as iHeartmedia (formerly Clear Channel) knows and can now use it as leverage against outside artists. If the corporations are in bed with the labels, why do we need DJs, PDs, Marketing and Promotions staffs at the labels, media, hell why do we even need the FCC and the list goes on and on. The situation is certainly IDEAL for iHeartmedia (formerly Clear Channel) but it’s unfair to the remainder of the industry. In additon, now Sony and UMG have been put on notice as we would be hard pressed to believe that iHeartmedia (formerly Clear Channel) would not use their new position with WMG as leverage against Sony and UMG to come aboard too but this could hurt iHeartmedia (formerly Clear Channel) the most if that happens. This could get VERY ugly as the other radio corporations are watching and drewling to see how they can get their OWN deals and artists will get caught up in a horrific political game that could literally destroy their careers. We can’t see the advantage and we can’t sit idly by and not point it out as one of the few leading industry trades. This matter is extremely important to the industry and it could be a HUGE unfortunate debacle.  Time will tell what happens.

sources: forbes, billboard, business