Musical artists and industry executives know all too well the effect that digital business models have had on revenue prospects over the past decade. However, it is now the internet radio pioneers that are starting to feel the squeeze and ask for amendments to current royalty management frameworks.
According to The Hill, more than half of the revenues generated by internet radio services are redistributed as royalty fees. Conversely, cable and satellite stations pay between 7 percent and 16 percent of revenues for the right to play the tracks of their choice.
The Internet Radio Fairness Act, a bill recently introduced by Representatives Jason Chaffetz (R-Utah) and Jason Polis (D-Colo.) seeks to remedy this disparity by bringing rates into closer alignment across all radio platforms.
Musical artists have already expressed their displeasure with the bill, suggesting that it could deal another significant blow to their bottom lines. But according to the Los Angeles Times, several neutral observers hold a more optimistic view.
In an interview with the news source, University of California - Los Angeles electrical engineering professor, and Brookings Institute fellow, John Villasenor suggested that websites such as Pandora will be better positioned to deliver innovations that benefit all corners of the music industry if they are freed from the confines of the currently "punitive" royalty system.