If you’ve used Pandora anytime in the last couple days, you’ve probably already heard about the Internet Radio Fairness Act that Founder Tim Westergren is encouraging all users to support by contacting their representative. I’ve already heard quite a few personal appeals from Tim Westergren myself that have interrupted my Pandora listening, as well as received a personal email from him about it. But what is the Internet Radio Fairness Act and why is it such a big deal?
The Internet Radio Fairness Act is a bill that was recently introduced in Congress that seeks to ensure equity in the royalties paid by various radio platforms. Pandora apparently pays 50% of its revenue in royalties, while satellite competitors like SiriusXM pay only about 7.5%. Clearly a stark and dramatic difference! To address the difference, this bill is proposing that the same royalty standard be applied across internet radio, satellite, and cable by decreasing Pandora’s royalty obligation to be more comparable with its competitors. In one of his appeals, Westergren points out that so many new artists that wouldn’t otherwise be heard are discovered on Pandora and Internet Radio, but the unusually high royalties that Pandora is forced to pay will prove prohibitive in the continued success of internet radio.
Opponents of the bill argue that it would reduce performance royalties to a level that is unfair to the artists. Instead, certain opponents are proposing that royalty rates applied to satellite and cable be raised to the same level applied to internet radio platforms, thereby leveling the playing field but also ensuring fair compensation for artists.
I personally don’t know too much more about this debate and the subtle complexities that are sure to take place. It is refreshing to me in this election season that the Internet Radio Fairness Act is a bi-partisan proposal in support of the growth of the internet radio market. However, I also share the concern that artists should be fairly compensated in this ever-changing music industry that seems to be taking more and more money away from them. Regardless of the outcome, I believe it will have strong implications in determining the future of internet radio and how music is broadcast in general.