IRFC's main mission to support passage of Internet Radio Fairness Act

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Issue Date: 
Oct 25 2012 - 6:45pm

From Issue:

Radio and webcasting organizations like Clear Channel, Pandora, and Salem, along with other industry parties like the Consumer Electronics Association, have today announced the formation of the Internet Radio Fairness Coalition.

The group formed to lobby Congress to pass the IRFA, or Internet Radio Fairness Act of 2012, which (among other measures) would require the same legal standard be used for determining sound recording royalty rates for all non-interactive digital music services.

The IRFA is a bill in both houses of Congress, H.R.6480 and S.3609. The bills were introduced by Reps. Jason Chaffetz (R-UT), Jared Polis (D-CO), Darrell Issa (R-CA), and Zoe Lofgren (D-CA) in the House and Sen. Ron Wyden (D-OR) in the Senate.

"We believe that market-based solutions are the way to go," said Bob Pittman (left), CEO of Clear Channel. "But in the absence of these agreements, the CRB needs to have and consider more relevant information so they are better able to develop a rate structure that will lead to a healthy, sustainable Internet radio marketplace. This will enable artists to earn more and connect more with their fans, consumers to have more choices, and entrepreneurs to invent and invest in new services."

Currently, government arbitrators base royalty rates for satellite and cable radio using a legal standard called 801(b). It requires the judges to consider how their decision would affect the industry and the public's access to copyright, as well as take into account the investment made by both copyright owners and licensees. Internet radio's royalties are based on the controversial "willing buyer / willing seller" standard, which does not take into account the concerns of 801(b). Rather, judges are instructed to set a rate they think a hypothetical "willing buyer" and "willing seller" would agree to in the marketplace.

The existence of different standards for different forms of radio has led to a situation in which satellite radio operator SiriusXM pays about 8% of its revenues for the use of copyright sound recordings, while webcasters are faced with obligations of 50% to more than 100% of their revenues. As an example, leading webcaster Pandora will pay nearly 70% of its revenue (based on Q1 FY 2013) for sound recording royalties.

"Legislation that establishes a fair royalty rate setting-standard for Internet radio will drive investment in webcasting, which ultimately offers greater opportunities and more revenue for working artists," said Pandora Founder and Chief Strategy Officer, Tim Westergren (right). "Internet radio has been shown to help decrease music piracy and increase music sales. When the digital music sector is allowed to grow and innovate, everybody wins."

Other founding members of the Coalition include 977 Music, AccuRadio, the Computer and Communications Industry Association (CCIA), Digital Media Association (DiMA), Digitally Imported, Engine Advocacy, National Religious Broadcasters Music License Committee (NRBMLC), Radio Paradise, and the Small Webcaster Alliance (SWA).

The Internet Radio Fairness Coalition has launched a website at InternetRadioFairness.com.

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