As promised, a host of radio and Internet radio companies have launched the Internet Fairness Coalition, which supports the Internet Radio Fairness Acts making their way through the House of Representatives and the Senate. Major supporters include Clear Channel, Pandora, and AccuRadio. The proposed laws would put performance royalty rates for net radio on a par with rates charged satellite and cable based services. Internet radio listeners are always on board for these campaigns. So a huge portion of the fight is for the hearts and minds of musicians and artists who, obviously, would receive lower royalties under the new standard.
“Without a sustainable market, rates don’t matter,” the coalition’s legislation page explains:
The revenue to artists is a function of rate times number of users. Both need to be considered to build a robust and sustainable market. The current rate structure actually deters volume on existing services — along with hindering the entry of new services into the marketplace. This prevents more music from being played to more listeners, which then prevents artists from making more money – and prevents record companies from making more money as well.
Bottom line: “The record labels and their allies don’t seem to understand how to help develop a sustainable market, and without that expertise they have defaulted to simply pushing for rates that cause possible new entrants to decide against entering the market and existing players to either drop out or reduce their volume.”
Obviously the labels and their allies disagree.
“It’s true that as digital radio continues to grow, so does the amount that performing artists and rights owners receive for the use of their content,” blogged the royalty distributor SoundExchange on October 10, in anticipation of this initiative. “We’re proud to support this growth, and it’s our hope that Internet radio platforms like Pandora continue to thrive. But the company can’t cut costs at the expense of musicians. It’s simply unfair.”
Thus the question boils down to what the term “sustainable growth” actually means. How could this be measured? What percentage of revenue spent on royalties would be acceptable? Do cable and satellite companies bear greater infrastructure burdens that make comparatively lower royalty rates logical?
These are the kinds of questions that lawmakers will ask as these bills receive hearings in the House and Senate.
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