Randy Michaels to head Clear Channel New Technologies Division (July 23, 2002)

Clear Channel announces New Technologies Division and Randy Michaels will immediately move from Radio to lead new division. Mark Mays will be acting CEO of Clear Channel Radio while searching for new CEO. Visit our website at www.clearchannel.com

San Antonio, TX (July, 2002) - Lowry Mays, Chairman and Chief Executive Officer of Clear Channel Communications, Inc. announced today that Randy Michaels, currently CEO of Clear Channel Radio, will immediately head up the New Technologies Division of Clear Channel. In this new role Randy will be focused on the changing technological landscape including interactive, wireless broadband and satellite technologies. Visit our website at www.clearchannel.com

Mark Mays, President and Chief Operating Officer of Clear Channel Communications said, "Randy has been, and continues to be, a great contributor to Clear Channel. Without his vision and foresight we would not have been able to develop the best, most well positioned, unduplicatable collection of radio stations in the world. Randy's greatest strength is his ability to see how the radio industry will evolve long before it does. In his new role, Randy will be able to utilize this strength to enable us to react better to the advent of new technologies and their impact on the Company. And he can teach me how to print out my e-mail." Visit our website at www.clearchannel.com

Randy Michaels, CEO of Clear Channel New Technologies, said, "I am excited about the opportunity to once again look out in to the future and help shape the way we will adapt to it. I enjoy the challenge and stimulation of breaking new ground and look forward to this newly created position. Now I get to surf the Internet all day long for a living." Visit our website at www.clearchannel.com

Mark Mays will assume the position of Acting CEO of Clear Channel Radio. John Hogan will continue in his position as Chief Operating Officer of Clear Channel Radio. Mr. Hogan added, "The Radio group will miss the presence of Randy's passion and his great sense of humor. Fortunately, Clear Channel Radio has tremendous strength throughout its management ranks. I am confident that our over 300 general managers along with our talented group of 12 senior vice presidents will not miss a beat and will continue with their industry leading performance." Visit our website at www.clearchannel.com

About Clear Channel Worldwide: Visit our website at http://www.clearchannel.com.

Clear Channel Worldwide, headquartered in San Antonio, Texas, is a global leader in the out-of-home advertising and entertainment industries with radio and television stations, outdoor advertising displays, and live entertainment productions and venues throughout the US and in 65 countries around the world. Visit our website at www.clearchannel.com

Certain statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Visit our website at www.clearchannel.com

In recent weeks, Michaels, was considered to be not just the most powerful figure in the Clear Channel hierarchy, has faced problems with independent promoters, whose deals with Clear Channel are being renegotiated. Additionally, it's said that his meeting with the heads of several record labels have gone badly. It's not known whether either or both of these situations contributed to the decision to remove Michaels. Visit our website at www.clearchannel.com

Michaels was promoted to Chairman/CEO of Clear Channel Radio in May 2000, shortly after the radio conglomerate announced its intention to purchase AMFM Radio. The AMFM deal followed a long line of purchases that included Jacor Communications. Visit our website at www.clearchannel.com

Previously, Michaels served as President of the giant's radio division. Visit our website at www.clearchannel.com

Michaels has held every position from the control booth to the CEO office. He is best known for his programming expertise, engineering prowess and competitive spirit. With the new position, Michaels will move from radio to the technology division. Visit our website at www.clearchannel.com

But radioink.com asks if Bob Pittman, the former AOL-TW COO who stepped down from his post recently, would reenter radio as the Clear Channel CEO to build the company bigger? Visit our website at www.clearchannel.com

Rumors are flying throughout the industry that Pittman, knowing he would be exiting, has been in serious discussions with Lowry and Mark Mays to run Clear Channel and build it beyond radio, outdoor, and television. Pittman is very familiar with the radio industry. He spent several years in radio programming, starting as a request line operator at WDRQ Detroit in the 1970s. He went on to invent MTV following a stint as program director of WNBC following a career in the radio business. Visit our website at www.clearchannel.com

Visit our website at www.clearchannel.com

Hope that's enough plugs for the company. I make fun of them whenever I can.

Broadcast Groups Appeal Internet Royalty Decision

In a motion filed late Monday, a group of radio stations said a federal court in Philadelphia and the U.S. Copyright Office had misinterpreted the law when they said that radio stations had to pay musicians and recording companies when they "stream" their songs over the Internet.

The Copyright Office established a rate of 0.07 cents per listener per song in June, which means that Internet-only "Webcasters" and broadcast giants like Clear Channel Communications Inc.CCU.N would be on the hook for 70 cents for each song played to an audience of 1,000 listeners.

The rate was decried as onerous by radio stations and Webcasters, many of whom said they would be forced to shut their doors.

Webcasters did not participate in the appeal of the August 2001 decision, which was filed in the Eastern District of Pennsylvania.

Radio stations have historically been required to pay per-song royalties to songwriters but not performers, recording companies, and anyone else who own the rights to the "sound recording" of a song.

Congress said sound-recording owners should get paid for Internet transmission when it updated copyright laws for the digital era in 1995 and 1998.

But Congress intended the law to apply only to services that would enable users to select and download songs, not online radio-style broadcasts that do not allow users to save songs, the broadcasters said in their appeal.

While downloadable music may dampen CD sales, radio broadcasts over the air and through the Internet stimulate sales, they said.

"Congress has long recognized the mutually beneficial relationship between the radio and recording industries, particularly the enormous promotional benefits derived by the recording companies from radio airplay of sound recordings," the appeal said.

The Recording Industry Association of America, which represents the five major labels, said it hoped the radio stations would lose their appeal.

"Rather than seek special treatment from the courts, we encourage the broadcasters to work with the labels and artists as our industries transition into new businesses," said Steven Marks, a senior vice president at the RIAA.

The appeal was filed by the National Association of Broadcasters and radio firms Bonneville International Corp., Clear Channel, Cox Radio Inc CXR.N ., Emmis Communications Corp.EMMS.O , Entercom Communications Corp.ETM.N and Susquehanna Radio Corp.

The RIAA represents music divisions of Vivendi Universal EAUG.PA , AOL Time Warner Inc AOL.N ., EMI Group Plc EMI.L , Bertelsmann AG BTGGga.D , and Sony Corp 6758.T .

Royalty fees killing most Internet radio stations

By Jefferson Graham, USA TODAY

More than 200 Internet-based radio stations have shut down because of a royalty fee that takes effect in September, and more are closing daily.Most of the estimated 10,000 radio Webcasters are expected to follow suit, "with the exception of Yahoo, AOL, Microsoft and other deep-pocketed conglomerates who can afford a loss leader," says Kurt Hanson, editor of the Radio and Internet Newsletter.

On June 20, a copyright appeals board set a rate of seven-hundredths of a cent per song, per listener. For many stations, run by music fans for music fans, that works out to thousands of dollars more than they make.

Payments are due Oct. 20 for this year and are retroactive to 1998, which could add up to tens of thousands more in arrears. The fee applies to both commercial and non-commercial stations; many non-profits have closed their Web stations, including University of California-Los Angeles and New York University. KPIG of Watsonville, Calif., the first commercial station to stream its signal over the Internet in 1995, has stopped Webcasting, as have others with dedicated followings such as All80s, GrrlRock and SavageRockRadio.

Many Web stations already pay copyright royalties to songwriter organizations. This new fee - which traditional over-the-air radio stations don't pay - goes to record companies.

Hilary Rosen of the Recording Industry Association of America says this issue shouldn't be presented as big labels vs. mom-and-pop operations: "If you don't have a business model that sustains your costs, it sounds harsh, but that's real life. If a grocery store can't afford to pay for the vegetables, they can't keep their doors open."

However, many of the stations shutting down are non-profits. "This isn't a bunch of rich college kids who don't want to pay the fee," says Will Robedee, general manager of Rice University's KTRU of Houston. "Most college station budgets come not from tuition but student fees." And when the new rates demand per-song, per-listener fees, "the better we do our job, by attracting more listeners, the more it will cost us, even though we're not making money."

Small stations have their supporters. Rep. Rick Boucher, D-Va., is expected to introduce a bill this week to offer relief. "The goal is to make sure the small Webcasters who measure their revenues in the tens of thousands are not put out of business by a copyright payment requirement in the hundreds of thousands," he says.

But with time short and Congress in recess in August, Boucher concedes, "This is not going to be easy to pass. Any legislative process will be staunchly opposed by the people who benefit from the high and exorbitant rate."

A concert is slated for tonight at 7:30 ET at the State Theatre in Falls Church, Va., and on the Web at www.webcasters.org, to benefit small Webcasters.

John Simson, executive director of the SoundExchange, formed by the RIAA to collect royalties from new media, says he's willing to work out a compromise with the small Webcasters that could keep them in business, but hasn't come up with a plan yet. "We want to reach a resolution well in advance of the Oct. 20 deadline," he says.

Rosen contends that most college stations won't owe more than $500 a year. "Given our problems with digital piracy on university servers, it is almost comical that they have the nerve to complain about $500," she says.

Mourning the end of small Net radio sites

By Jefferson Graham, USA TODAY

For three years, Rusty Hodge ran his SomaFM Internet radio station. He watched it grow from 10 listeners an hour to 2,000 and become one of the more popular Net stops thanks to its eclectic mix of electronica and independent pop, the sort of stuff that's tough to find on commercial radio.

But Soma has shut down because of federal copyright royalty fees that go into effect in September. "We would have to pay $10,500 a month," says Hodge, 40, who ran Soma (named for the San Francisco area south of Market Street) out of his garage. "We existed on listener donations. Our last month produced $3,000. We weren't in any position to pay that kind of money."

The new royalties facing Webcasters and threatening the existence of many of them stem directly from early concerns by the music industry about how the new medium of the Internet would affect their business. With industry input, the Digital Millennium Copyright Act was enacted in 1998, years before Napster became the record labels' nightmare. One provision of the sweeping legislation gave the U.S. Copyright Office until 2002 to work out a royalty rate for the use of music on Internet radio.

While a handful of sites were able to make deals directly with the Recording Industry Association of America, which represents the major companies, most couldn't come to terms. So an arbitration panel was set up as part of the DMCA to come up with a rate acceptable to both sides.

The Copyright Arbitration Royalty Panel first set a rate of 14-hundredths of a cent per song, per listener. When Webcasters balked, asking instead to be allowed to pay a percentage of their revenues, the rate was halved.

That's still too much for many of them. More than 200 stations have closed, and more are expected to follow. Because the rate is retroactive to 1998, huge checks are due Oct. 20. "We shut down because we were scared of the liability," Hodge says. "We were looking at a payment of $60,000 to $80,000."

Some insiders paint a bleak picture.

"Any company doing ad-supported radio will cease to exist," says Peter Csathy, president of media software company MusicMatch, which runs the subscription RadioMX service. "The only ones who'll be able to continue are the conglomerates. For the consumer, that means less choice and (less) exposure to new acts. It's bad for consumers, bad for artists and bad for the labels." (MusicMatch has its own deal with the labels and says it won't be affected.)

Despite a bill set for introduction in Congress this week to exempt small Webcasters, plus a legal challenge to the copyright panel's ruling, "I'm very pessimistic that anything will happen," Hodge says. "The labels have lots of lawyers and a huge annual budget for lobbyists. It's hard to fight that."

Unlike broadcast stations, which have tight playlists, the new medium of Net radio airs a greater variety of music and has become popular with fans of world music, bluegrass, jazz, blues, independent and alternative rock, and other genres rarely heard on radio.

Classical pianist Julianne Markavitch, 33, sells her own CDs at gigs in the Phoenix area and on the Web. Area stations don't play her - but Beethoven.com, based in Hartford, Conn., does. It recently gave away 50 copies of her latest release. "For the first time, I'm getting played every day," she says. "I'm going to be really sad if Beethoven goes away, and I have to go back to pounding the pavement and working on regular radio."

Beethoven hasn't closed yet, but "we're taking a very hard look at whether or not we can survive," says the site's Kevin Shively.

The copyright rate for Webcasters is based on the initial deal Yahoo made with record labels in 1998.

Says John Simson, who runs the RIAA-backed SoundExchange royalty collection agency, "The irony is that the big guys used the little Webcasters to get the rate cut, but according to them it doesn't help at all. Fact is, the rate is very low for the larger services that can afford to pay."

Dallas Mavericks owner Mark Cuban, who founded Broadcast.com, which was purchased by Yahoo, acknowledges that the agreement's goal was to level the field by ousting small Webcasters.

"Of course I would try to negotiate something that would put my company in a better competitive position," he said in an e-mail interview. The Yahoo deal was based on numbers of listeners instead of percentage of revenue, which is what small Webcasters are seeking. "percentage of revenue is not fair to those who have revenue," Cuban says. "How do you compete with someone who doesn't?"

The Yahoo deal "was from another time, at the height of Internet mania," Csathy says. "The bottom has dropped out, so the rates make no sense."

In fact, when the deal expired in 2000, Yahoo chose not to renew it, waiting instead for a rate to be set. "At the time, the deal made sense. I don't think anyone expected that one agreement would become the benchmark for an industry rate," says Yahoo's Robert Roback.

Kurt Hanson, who runs the Rain and Internet Newsletter at www .kurthanson.com, believes that only a handful of the estimated 10,000 Net radio stations will still be in business this fall if the rate isn't changed.

Cuban agrees. "There is no law against an industry being stupid and killing off their customer base as the music industry is doing," he says. "The vast majority of stations will either shut down or move to Canada or overseas."