Friday 16 November 2012

Pandora opens up a box of fun

Pandora, the American streaming music service, has issued legal proceedings in the USA on the basis that the rates currently being offered by ASCAP, the US collecting society are unfair, because they are not as favourable as those offered to traditional broadcasters like Clear Channel, which have recently moved into the online music space. Arguing that Clear Channel have an advantage as it can negotiate the royalties they pay for their online services at the same time as negotiating music publisher fees for their FM networks, via the Radio Music Licensing Committee, the move comes after direct negotiations had failed. 

However, in the world of sound recordings, the collection societies are fighting back with the news that SoundExchange, the non-profit organisation that represents record labels and recording musicians, has launched its opposition to the Internet Radio Fairness Act, highlighting a letter signed by 125 artists who oppose Pandora's plan to "cut artists' pay" when music is played over Internet radio. The open letter, which has over 40 Grammy winners' signatories and the backers includes Kiss, the Dead Kennedys, Missy Elliot, Pink Floyd, Megadeath, Robert Plant, Don Henley, Billy Joel, Maroon 5, Martha Reeves, David Sanborn, Ne-Yo, Common and Roger Waters, praises Pandora saying "We are big fans" - and celebrates the company's commercial success, but asks why Pandora, with massive growth in revenues and a successful IPO under its belt, is pushing Congress to "slash musicians" pay saying "That's not fair and that's not how partners work together" telling Pandora it's time to go back to the drawing board.

“We all want Internet radio to succeed, but it won't if it tries to do so on the backs of hard working musicians and singers," said MusicFIRST Executive Director Ted Kalo, and SoundExchange President Michael Huppe added "This issue is critical to the tens-of-thousands of recording artists we represent - all of whom rely on this digital performance revenue stream to make a living,". "It is important that we protect artists and the long-term value of their music, which is, after all, the foundation of Internet radio." 

Pandora claims the internet service has paid considerably more in performance royalties than satellite radio provider SiriusXM and the legislation is needed to level the playing field. 

The proposed law, the Internet Radio Fairness Act, (H.R. 6480/S 3609) was introduced in the US Senate by Oregon Democrat Ron Wyden. The House version has bi-partisan support and is backed by Republicans Jason Chaffetz (Utah) and Darrell Issa (California) and Democrats Jared Polis (Colorado) and Zoe Lofgren (also California) The legislators claim the Internet Radio Fairness Act would modernise the music copyright royalty system by setting a more equitable standard for the calculation of royalty rates for Internet radio. Interestingly, the EFF also support the legislation saying on their website that now the 2012 presidential campaign is over, “Congress may soon be able to get back to business. One of the things it should prioritize is fixing a longstanding tax on innovation that most folks don’t know about, but they should:the unfair legal treatment of Internet radio”.

So - a tax on innovation?  or a tax on musicians and the music industry? The debate seems set to run ....... musicians perspective on Pandora

1 comment:

Steve said...

It is truly discouraging that Pandora, with its level of innovation and financial success would push for Congress to do such a thing. To give some background, Pandora has over 50 million users, its revenue is over $270 million, and its Alexa rank is 285 (54 in the United States). Pandora is, however, losing money with its current business model and understandably, the executives of Pandora Internet Radio are trying to alleviate this problem. That being said, they are going about this in COMPLETELY the wrong manner. The musicians whose royalties Pandora is trying to reduce (by 80% mind you, are the same musicians who helped Pandora reach its level of success. In my mind, this is a perfect example of "biting the hand that feeds" and am rather disappointed in Pandora's decision to pursue this.