Clear Channel Rivals Cry Foul Over Live Concert CDs

06/01/2004 12:35 AM, Reuters
Sue Zeidler

Clear Channel Communications Inc. is under fire from smaller rivals worried that it will shut them out of the quickly growing business of offering live-concert CDs immediately after shows.

San Antonio, Texas-based Clear Channel claims a key patent for the technology to offer such recordings, but competitors challenge whether that gives the company exclusive rights to create and sell instant recordings of live performances.

The competing claims comes as Clear Channel, which is the No. 1 U.S. radio station owner, faces a trial in August over allegations that it abused its radio market clout to benefit its concert business.

The most recent friction began in April when Clear Channel announced that it had bought a key patent for producing live CD recordings within 5 minutes after concerts.

But smaller companies, like Santa Monica, California-based Kufala Recordings, which also records live concerts, claim the patent is a veiled effort to muscle them out of a previously negotiable market.

"If you try to provide similar services ... they're going to sue you for patent infringement or to license their patent," said Kufala president Brady Lahr. "Clear Channel is really using their monopoly in the market to powerfully restrain trade above and beyond the patent issue."

Brian Becker, chief executive of Clear Channel's live entertainment unit, responded Friday by saying the company had invested substantial resources over the past two years in its Instant Live recording service.

"We want this service to be in widespread use and welcome all legitimate and serious conversations with those interested in licensing our patent. We will not, however, conduct

licensing conversations in public or via the media," he said.

Instant Live has already recorded concerts by the Allman Brothers, and Clear Channel expects to enter into deals with more than 40 acts to produce live recordings this season.

But Richardson, Texas-based Immediatek Inc., the parent of DiscLive Inc, which also records live concert CDs, said Clear Channel's patent did not give it exclusive rights to the business of creating recordings of live performances.

"Our attorneys have provided Clear Channel's attorneys with this information and more to detail why their patent is not relevant to the DiscLive system and requested that they provide us with specific details if they disagree," said Zach Bair, chief executive of Immediatek in a statement this week.

Immediatek said it plans to continue rolling out its DiscLive product shortly after live shows.

Music attorneys said approval is always required by multiple parties, including the artist, record label, music publisher, and venue owner before a live concert CD can be recorded.

But Lahr said Clear Channel's market concentration was changing the playing field. "From our past experiences, every venue has been open and willing to negotiate their venue fees except for Clear Channel," said Lahr.

"Now virtually all performing artists like the Pixies, Billy Idol , and even Bruce Springsteen run the risk that if they record their own shows at any venue in the country, then sell the CDs that same night, Clear Channel can and will go after the artists and make them pay," said Lahr.

Clear Channel Entertainment currently owns, operates or exclusively books about 130 concert venues, including nearly 100 in North America.

Last month, a federal judge in Denver ruled there was evidence Clear Channel had abused its clout by threatening to keep artists off the air unless they performed at its shows and ordered Clear Channel to stand trial in August.

The ruling came in a lawsuit filed in August 2001 by small Denver concert promoter Nobody in Particular Presents. The lawsuit accuses Clear Channel of violating antitrust laws.

Reuters/VNU