The current radio model only allows royalties to be paid out to songwriters when songs are given airplay. This is because lawmakers believed that the performers were getting paid in publicity.
The deal between country music label, Big Machine, and Clear Channel does have implications on internet radio, according to Paste Magazine
. Clear Channel, the largest radio network in America, already has to pay performers every time they play their song when it is streamed on the internet. However, now Big Machine will allow Clear Channel to pay lower royalties from the internet based on a percentage of income that comes from Clear Channel's streams.
According to NPR
, the deal is all about trying to even out the payment system between online radio and terrestrial radio.
The deal between Big machine and Clear Channel was announced back on June 5, according to the Economist
. The deal may be a bit costly because 98% of Clear Channel's listeners are terrestrial while only 2% of their listeners are digital. However, Big Machine does not supply a huge proportion of music that Clear Channel plays.
Now all eyes are on Clear Channel to see whether the company can make money from radio digital.