Pandora Takes Music Royalty Fight to Congress

Pandora is taking its fight to lower the royalty rates paid by Internet radio providers to Congress. Chief Executive Officer Joseph Kennedy testified before the House Judiciary Subcommittee on Intellectual Property, Competition and the Internet.

“The current rate-setting structure is a clear case of discrimination against the Internet and innovative services,” Kennedy argued. “This lack of a level playing field is fundamentally unfair and indefensible.”

Kennedy was one of six witnesses to weigh in on the Internet Radio Fairness Act. The legislation, co-sponsored by Rep. Jason Chaffetz (R-Utah) and Sen. Ron Wyden (D-Ore.), seeks to lower royalty rates paid by Internet radio providers. It would make Internet radio stations subject to the 801(b) standard of the Copyright Act, which is currently applied to cable and satellite radio providers like SiriusXM.

As detailed in Kennedy’s testimony, Pandora will pay nearly $250 million in royalties, more than half of its revenue, under the current licensing scheme. Meanwhile, satellite radio services like SiriusXM will pay 7.5 percent of their revenue and cable radio will pay 15 percent.

Of course, the Internet Fairness Act also has its detractors, including musicians, record companies and performing rights groups. They largely argue that the legislation will aid Internet radio providers at the expense of musicians.

“The claims that the current rates are ‘too high’ are wrong, overblown, and based on an incomplete and premature record,” Michael Huppe, president of SoundExchange, said in written testimony before the committee. Pandora chose “to focus on building its audience — and thus its usage — while keeping its advertising load and subscription fees low,” Huppe said

Source: Business Week

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