Supporters say Internet Radio Fairness Act would drive innovation and increase revenue for performers

Friday, September 21, 2012 - 11:25am

Two radio industry groups have issued statements of support for the just-introduced Internet Radio Fairness Act (here).

Both thanked Reps. Chaffetz and Polis and Sens. Wyden and Moran for the introduction of the bill, and decried the unfairness that Internet radio alone is subjected to rates determined not by the 801(b) standard of the Copyright Act, but by the imagined marketplace of the "willing buyer willing seller" standard.

"In 1998, Congress passed the Digital Millennium Copyright Act (DMCA), instructing the Copyright Royalty Board (CRB) to set (an Internet royalty) rate 'that a willing buyer and a willing seller would agree to,'" explained Kurt Hanson, founder and CEO of webcaster AccuRadio (and publisher of this newsletter), speaking on behalf of the Small Webcaster Alliance (which includes services like Digitally Imported, 977 Music, and Radio Paradise). "The difficult-to-interpret language of that standard has been a nightmare for our industry ever since, leading to CRB decisions that have forced Internet radio companies to pay unreasonably high royalty rates and hindering innovation and growth."

The National Association of Broadcasters joined in support of the bills. "NAB... strongly supports legislative efforts to establish fair webcast streaming rates. NAB will work with the bill's sponsors and all interested parties to create broadcast radio streaming rates that promote new distribution platforms and new revenue streams that foster the future growth of music."

We expect to soon have reaction from other supporters, as well as opposition statements from music industry representatives like the RIAA, SoundExchange, and performers organizations, as well as Congressional opponents to these bills.

CEA, Pandora, and more add their support for Internet Radio Fairness Act

Friday, September 21, 2012 - 11:25am

Groups representing the consumer technology industry and major online media companies, as well as Internet radio's largest webcaster, have now publicly supported the Internet Radio Fairness Act, introduced to both houses of Congress today by Reps. Jason Chaffetz (R-UT) and  Jared Polis (D-CO) and Sen. Ron Wyden (D-OR).

Michael Petricone, senior vice president of government and regulatory affairs, Consumer Electronics Association (CEA): "Under today’s outdated rules, Internet radio providers are forced to pay a significantly larger percentage of royalties than their competitors," commented CEA SVP/Government and Regulatory Affairs Michael Petricone. "This irrational and unfair royalty system hinders investment and innovation in Internet radio. The changes proposed by the Internet Radio Fairness Act are simple and long overdue... We urge the House and Senate to pass the Internet Radio Fairness Act as quickly as possible."

The CEA represents two-thousand consumer technology companies and produces the International CES, the world's largest consumer technology tradeshow.

In Pandora's statement supporting the bills, company founder and Chief Strategy Officer Tim Westergren said, "Royalty rates for different formats of digital radio are astonishingly unequal... Last year, Pandora paid roughly 50% of its total revenue to royalties, more than six times the percentage paid by SiriusXM." He added, "A more equitable rate structure would drive investment and innovation, bringing greater choice for consumers, and ultimately greater revenue for performing artists."

Pandora remains the far-and-away leading webcaster in Internet radio, with nearly 1.3 million "Average Active Sessions" in the U.S. only (M-Su 6a-12M), according to Triton Digital Webcast Metrics (here). This is seven times that of the nearest competitor, Clear Channel, and represents listening growth of 89% so far in 2012.

CCIA (the Computer & Communications Industry Association) counts Google, Microsoft, Yahoo!, Ebay, and Pandora among its members.

CCIA President/CEO Ed Black said, "Charging different rates for different digital radio providers is fundamentally unfair and goes against the interests of an economy that has time and again chosen to boost competition and innovation." VP Matt Schruers added, "This legislation would update the law to no longer discourage competition since technology has enabled different distribution methods for radio offerings."

Representing larger webcasters, online media, digital services, and technology innovators, DiMA (Digital Media Association) members include Amazon, Apple, Live365, Real/Rhapsody, Slacker, YouTube, and more.

DiMA Executive Director Lee Knife said today, "The 801(b) standard has been widely used for nearly half of a century; and it’s worth pointing out that those who complain about applying the 801(b) standard to Internet Radio today have conspicuously never complained about the application of that very standard by the CRB when setting the rates to be paid for their mechanical licenses."

Broadcast groups like Clear Channel and Salem Broadcasting are also reportedly in support of the bill, and several others are expected to issue statements to that effect. 

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