RAIN 9/26: Pandora "lobbies up," mobilizes listeners for "Fairness" battle

Paul Maloney
September 26, 2012 - 2:40pm

Pandora is once again enlisting the power of its massive listenership -- not to mention some good old-fashioned professional lobbyists -- in hopes of getting lawmakers on board the recently-introduced Internet Radio Fairness Act.

The IRFA would instruct copyright judges who determine copyright royalties to use the same legal standard for Internet radio royalties as are used for satellite and cable radio. Internet royalties are currently based on a different standard, and webcasters pay a vastly higher percentage of their revenue to use music than other forms of radio.

Shortly after the bill dropped this week, Pandora began directing users to its dedicated "Support the Internet Radio Fairness" page. The page features a one-minute video of founder Tim Westergren explaining the bill and how to contact their Reps and Senators (using links on the page). There's a "frequently asked questions" section with further explanation, and links to post to Twitter (you can search the hashtag #FairNetRadio to see the traffic) and Facebook. Pandora listeners also received an e-mail from Westergren (here) requesting their help.

Pandora has in the past asked listeners to get behind its legal fights, with enthusiastic results.

Meanwhile, the company has also reportedly enlisted Washington, D.C. law firm Constantine Cannon for lobbying help with lawmakers. According to LegalTimes' blog The BLT (here), Pandora spent $90,000 on federal lobbying during the first half of this year.

Paul Maloney
September 26, 2012 - 2:40pm

Nearly half (46.4%) of the respondents to a new study say they listen to AM/FM streams on a PC/Mac/tablet daily. Among those who own smartphones, 23% say they use them to listen to streams of AM/FM stations daily.

Alan Burns & Associates and Triton Digital polled more than 41-thousand people of "all ages, genders, (and) format fans" in August and September, and revealed their findings last week at the 2012 NAB RAB Radio Show in Dallas.

A little more than a quarter (25.4%) of all the respondents said they use a smartphone to listen to music

Interestingly, of those with in-car Internet access, more than 70% listen to AM/FM the most of all their listening options (Internet, CDs, MP3s). Only about 7% of those with Internet in the car seem to be using AM/FM less.

See the slides from the study presentation here.

Paul Maloney
September 26, 2012 - 2:40pm

We've seen several of the on-demand music subscription services add "lean-back" radio style streams to their offerings. Not only does it give listeners a familiar and effortless music enjoyment and discovery experience, it can be cheaper for the services to use the music.

Spotify is reducing its royalty obligation in the U.S. by paying copyright owners per the "statutory" webcasting rates established by the U.S. Copyright Office for the free Internet radio service on its mobile app, reports Billboard.biz.

("The radio service on the on-demand desktop app does not take advantage of the statutory license -- it's more of an on-demand radio service than a Pandora-like, non-interactive radio service," reports Billboard.)

Another advantage of the webcast statutory license is that it applies to any released music. "Hold out" artists like the Beatles and AC/DC can't deny webcast services the right to perform their music, as they can with on-demand services.

Interestingly, for the non-interactive webcast service, Spotify says it will stick with the same catalog used by the on-demand feature. Billboard suggests, "Spotify could have a poor user experience if different songs were available on different parts of its service."

On-demand services in the U.S. need to establish agreements with the copyright owners for each piece of music played. Copyright owners (record labels), which view these services as "substitutional" for record purchasing, command a high royalty (and in many cases, equity) for the on-demand use of their music. But for Internet radio, where listeners can't build playlists song-by-song or pick the exact tune to play next, things are simpler. Webcasters need only abide by the "statutory" terms and rates, and can play any commercially-released music.

"Although Spotify's mobile radio service probably constitutes a very small portion of its overall U.S. traffic -- and an even smaller portion of its global listening -- the statutory license allows it to pay less than half when taking into account both master and publishing rights."

Read this entire Billboard.biz article here.