MusicFirst

Pink Floyd parrots record industry talking points for anti-Pandora tirade in USA Today

Monday, June 24, 2013 - 3:50pm

The three surviving members of rock royalty Pink Floyd attacked leading webcaster Pandora today for its efforts to reduce its music licensing costs in USA Today.

An op-ed from the band seems mostly constructed around oft-repeated talking points from the RIAA and music industry lobby group musicFIRST.

After the record industry corralled recording artists for its campaign to stop the "Internet Radio Fairness Act" (more here) in the last Congress, Pandora began to reach out to artists for support. The webcaster hopes to show Congress that there are recording artists who value Pandora as a promotional vehicle, and understand that royalty relief may be vital to its survival.

Again, using the well-worn tropes of earlier music industry efforts, Pink Floyd characterizes Pandora's efforts as an attempt to "trick artists" in their efforts to "slash royalties." Even the peril of an "85% artist pay cut," and the accusation that Pandora wants "growth of its business directly at the expense of artists' paychecks," are nearly word-for-word rehash of SoundExchange press releases.

One more-interesting sentiment from the band's op-ed: They want Pandora's help to get them royalties from AM/FM radio.

"Artists would gladly work with Pandora to end AM/FM's radio exemption from paying any musician royalties," Pink Floyd wrote, in apparent belief that webcasters' lobby on Capitol Hill could achieve something the record industry's can't.

Read Pink Floyd's op-ed in USA Today here.

Radio lobbies against royalties, labels counter with ad, nothing changes for webcasters

Wednesday, March 6, 2013 - 1:10pm

Lawmakers have made it pretty clear they don't want to hear about webcasting royalties any more -- including the Internet Radio Fairness Act -- before they deal with sound recording royalties for broadcast radio.

Inside Radio reports some radio executives are using the occasion of a conference in D.C. to visit with members of Congress and ask support for the "Local Radio Freedom Act." The non-binding resolution opposes any measure requiring U.S. broadcasters to pay sound recording performance rights (more from RAIN here).

Meanwhile, the record industry group musicFIRST Coalition answered with an ad in Politico (that's the image, full-size here), accusing broadcast radio of being "stuck in the past" (since other forms of radio like satellite, cable, and webcasters pay).

While the record industry publicly cites Internet radio as a paying customer for its copyright licenses, its representatives remain adamantly against measures that would likely bring webcast royalty rates in line with those paid by satellite and cable radio. The IRFA (more here) would require judges to use the same legal standard to determine statutory rates for streaming radio that they use for satellite and cable.

While satellite and cable radio royalty rates are determined using a legal standard known as 801(b), the 1998 Digital Millennium Copyright Act requires Internet radio rates be set using a different standard known as "willing buyer and willing seller." Unlike 801(b), "willing buyer and willing seller" ignores the "real world" ramifications of a rate determination, and all notions of fairness and minimizing industry disruption -- considerations of the 801(b) standard.

So while satellite radio pays about 9% of its revenue to license copyright sound recordings, leading webcaster Pandora pays well over half.

A late-November House Judiciary subcommittee hearing on the IRFA quickly lost focus on the bill as record industry witnesses (and the committee members sympathetic to them) steered the discussion to the AM/FM exemption (our coverage here).

Writing in Huffington Post, musician David Fagin blames the AM/FM exemption for lack of progress on webcasting issues: "Congress is scared to go after big radio and their lobby, and the RIAA is 'just fine' with the status quo. In the meantime, both sides have decided to just kick each other's asses, instead." (More in RAIN here).

Reps. reintroduce measure to oppose radio royalties

Monday, February 18, 2013 - 12:10pm

Two Texas Congressmen on Friday reintroduced a resolution to oppose sound recording performance rights on AM/FM radio -- and brought back the term "performance tax" along with it.

Reps. Gene Greene (D) and K. Michael Conaway (TX) are behind House Concurrent Resolution 16: Supporting the Local Radio Freedom Act, with cosponsor support from 72 other lawmakers (57 Republicans, 15 Democrats). It's the same proposal the two introduced in February of 2011.

"The recording industry has lobbied for a new 'performance tax,'" reads a joint statement from Greene and Conaway. "Local radio already provides free advertising and promotion for the recording industry, and these fees could put the future of these stations in jeopardy."

Recording industry group musicFirst Coalition executive director Ted Kalo points to recent voluntary marketplace deals between broadcasters and record labels (e.g. Clear Channel and Big Machine) argue against the supposed danger to radio of performance royalties.

Read more in FMQB here.

IRFA critics accuse Pandora of asking for an "unfair subsidy"

Thursday, November 15, 2012 - 12:25pm

A group of 125 of the recording industry's biggest names are throwing their star power behind major record label efforts to oppose Net radio royalty reform.

"That's not fair and that's not how partners work together," reads the two-page "open letter" to leading webcaster Pandora in this weekend's Billboard magazine, signed by stars like Sheryl Crow, Pink Floyd, Billy Joel, and Katy Perry. The ad was placed by recording industry lobby musicFIRST and digital royalty group and industry advocate SoundExchange (below, click the image to read it).

Pandora supports the "Internet Radio Fairness Act" -- proposed legislation that would require copyright judges who determine the royalties webcasters pay for the use copyright sound recordings to use the same legal standard they use when determining the same royalties of satellite and cable radio (we have lots of coverage here). Major recording labels have come out in staunch opposition to the bill.

The ad accuses Pandora of enjoying "phenomenal success as a Wall Street company" yet of asking Congress to "gut the royalties thousands of musicians rely upon." A musicFIRST/SoundExchange joint press release from Wednesday calls the Internet Radio Fairness Act a "subsidy," which "could slash by 85% royalties paid to musicians and artists when their songs are played over Internet radio." 

Speaking in support of the bill on Tuesday (RAIN coverage here), Sen. Ron Wyden (D-OR) said, "Music is still dominated and controlled by a couple of multi-national corporations (which) act like a duopoly to maximize their profits, and not maximize the compensation of artists and not maximize musical choice... They are the people that made 'payola' a household word." Wyden himself introduced the Internet Radio Fairness Act in the Senate in September.

Last month, Pandora founder Tim Westergren (in RAIN here) revealed that in 2012 alone his service will pay nearly $3 million each in royalties to play the music of performers Drake and Lil Wayne -- half of which goes directly to the songs' performers. The music of Coldplay, Adele, Wiz Khalifa, and Jason Aldean will generate from Pandora more than a million dollars each this year.

The musicFIRST/SoundExchange press release is here.

RAIN Analysis: It’s ironic that the organizations are making an appeal for "fairness" when, in fact, what they’re fighting for is specifically to keep the concept of "fairness" out of the rate-setting standard for Internet radio.

The "801(b) standard" is the set of four criteria that Congress has historically typically instructed the U.S. Copyright Office to use to determine a royalty rate: (1) Maximize the availability of creative works to the public. (2) Insure a fair return for copyright owners and a fair income for copyright users. (3) Reflect relative roles of capital investment, cost, and risk. (4) Minimize disruptive impact on the industries involved.

801(b) is the standard used in other forms of digital radio, like satellite radio and cable radio, and it accurately reflects the public policy goal of copyright law, which is to maximize the availability of creative works to the public, using the concept of "fairness" for both creators and distributors.

By prevailing upon Congress in 1998 to change the rate-setting standard for Internet radio to the rate "which a willing buyer and a willing seller would agree to," the music industry has introduced confusion that has hamstrung the growth of Internet radio ever since. Because of the difficulty of applying this standard – since this is a marketplace in which a "willing buyer/willing seller" rate has never been determined – the judges in both rate-setting cases so far (2002 and 2009) ended up setting rates that were, for the majority of webcasters, greater than 100% of their revenues. Such a rate is far higher than the 7% to 15% rates that other forms of digital radio pay under the 801(b) standard, and it’s far higher than any "willing buyer" could actually afford to pay. -- KH

Like presidential opponents, royalty bill foes rail against "burdensome regulation" and "cheating the middle class"

Monday, November 5, 2012 - 12:05pm

An article in yesterday's New York Times likens the conflict over Internet radio royalties to the presidential race: business suffering under government-inflicted costs vs. wealthy industrialists cheating the middle class.

What the different players are saying sure makes the comparison apt.

Pandora founder Tim Westergren told journalist Ben Sisario, "This adversarial reaction toward Internet radio is counterproductive. It’s causing other businesses to sit on the sidelines, and that is hurting musicians. Ultimately, you want to have many boats in the harbor."

But MusicFirst Coalition, the record industry group that's the main face in the fight against proposed royalty reform, "says it believes that if Pandora gets everything it wants, it could cut its royalty bill by up to 85%," writes Sisario.

The Internet Radio Fairness Act, co-sponsored in the House of Representatives by Republican Congressman Jason Chaffetz of Utah (more here), would require Copyright Judges who determine Internet radio's royalty rates to make their decisions using the "801(b)" standard of Copyright Law, instead of the controversial "willing buyer willing seller." Webcasters like Pandora support the bill, as all other forms of digital radio have their royalties set using 801(b). The music industry is firmly against the bill.

Westergren said, "No one has yet explained to us why Internet radio is under a different standard. No one responds to that fundamental premise."

Naturally, for RIAA CEO Cary Sherman, it's really a matter of companies like Pandora trying to cheat the "entire music community" out of "a fair return on the creative works that are the reason companies like Pandora exist."

Clear Channel CEO Bob Pittman is largely credited with making his company a major online radio force with its launch of the iHeartRadio platform. He says the record industry is wrong to focus on rates. With lower rates, more companies will stream more music, and lead to more income. "If the rate suppresses the volume, there’s less money. If it encourages volume, there’s more money."

Of everyone siding with Internet radio services, it was Rep. Chaffetz himself who stood out with a shot at the music industry establishment: "The old-school dinosaurs are trying to help, but they’re stuck in the tar. They can go talk to the pterodactyls."

Read the New York Times article here.

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