A double-page ad running in the current issue of Billboard Magazine announces the protest of more than one hundred musicians against the Internet Radio Fairness Act, a piece of legislation that would change the current process for royalties to musicians and music labels for songs played on Internet streaming radio services, bringing the amount owed more in line with that of satellite music services.
The ad takes the form of an open letter described as “A Musicians’ Perspective on Pandora.” Those putting their name to the letter include musicians and bands crossing genres, from CeeLo Green to KISS, the Temptations to Trisha Yearwood, and Missy Elliott through to Jimmy Buffett.
“We are big fans of Pandora. That’s why we helped give the company a discount on rates for the past decade,” the letter reads, continuing by pointing out “Pandora is now enjoying phenomenal success as a Wall Street company. Skyrocketing growth in revenues and users. We celebrate that. At the same time, the music community is just now beginning to gain its footing in this new digital world. Pandora’s principal asset is the music. Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s not how partners work together. Congress has many pressing issues to consider, but this is not one of them. Let’s work this out as partners and continue to bring fans the great musical experience they rightly expect.”
So, is this a case of musicians being unfairly fleeced by Pandora? Not necessarily.
The Internet Radio Fairness Act, which has been publicly supported by Pandora – hence this advertisement – is backed by Oregon-based Democratic Senator Ron Wyden and has the support of the Electronic Frontier Foundation. It seeks to essentially reform the existing royalty rates paid by streaming musical services so that they more closely resemble the royalties paid by satellite radio; the difference being that, although royalty rates for both are decided by a panel of three independent judges called the Copyright Royalty Board, selected by the Library of Congress, satellite royalties are decided by weighing “fair returns” for each music track played, while streaming content service royalties are arrived at by estimating each track’s value to “a willing buyer and willing seller” in an open market. According to the EFF’s Mitch Stolz, the problem is that there isn’t an open market as such, making it easier for music labels to suggest prohibitively high royalty rates.
Unsurprisingly, music industry figures are also in favor of bringing both satellite and streaming royalties in line with each other; they’d just prefer it if it happened through raising satellite royalties to the same level as streaming.