Innovation Asset Blog

Coalition backs internet radio royalty reforms

Pandora, Clear Channel and nearly a dozen more internet radio companies and trade associations have formed the Internet Radio Fairness Coalition to express their support for two landmarks bills currently being floated in Congress. The reforms are intended to promote a more equitable and technologically savvy royalty management framework, but some are wondering whose interests would truly be served under the proposed legislation.

At the heart of the matter, according to AdWeek, is the revelation that Pandora spends 50 percent of its revenue to secure performance rights from artists and labels. In contrast, Sirius XM satellite radio only spends 10 percent of its revenues on such royalties.

The coalition is advocating for a new system that would see internet radio royalties reduced and brought into alignment with the comparatively less expensive rates paid by terrestrial and satellite radio stations. However, the bills are opposed by the Recording Industry Association of American and record labels that insist raising broadcast and satellite rates to match the current web-streaming royalties would be the more appropriate action to support musical artists.

As Downtown Music Publishing president Justin Kalifowitz wrote in an OpEd for Billboard, songwriters and music publishers have been left conspicuously absent from the discussion. While satellite radio stations pay 50 cents on the dollar to these stakeholders - and iTunes pays approximately 15 cents - Pandora pays the lowest ratio of artist to songwriter royalties of any income type in the music business at 8 cents on the dollar.ADNFCR-3832-ID-800895819-ADNFCR

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.