Musicians lose out in Internet Radio Fairness Act
By James | Posted August 17, 2012 in 4
Great music has always had a way of spreading, no matter the technology or the era. In ancient times, if a song had that special something, it was passed down orally, person to person, family to family, from generation to generation. Today, technology enables us to hear the latest hit almost as soon as it is created and recorded. And digital music innovators like LastFM, Music Choice, Pandora, SiriusXM and countless others are making it easier than ever to hear the music we love, whenever and wherever. Whether it’s at home, at work, or on our mobile devices, the benefits of our nation’s creative community are now available at the touch of a button (or click of a mouse).
Of course, this technological innovation moves much faster than the laws out of Washington, which still treat each radio platform a little differently. That means some radio platforms, like Pandora, compensate artists when they play their recordings, while regular over-the-air “terrestrial” radio stations don’t pay musicians a dime for playing those same recordings.
That’s not fair to musicians that depend on those performance royalties to put bread on the table. And it’s not fair to expect some radio companies to pay while others get a free pass.
Musicians, labels, and radio companies have worked together with Congress over the last few years to end the injustice and bring parity to the radio industry. We’re not there yet, but we’ve made significant progress; the House and Senate Judiciary Committees voted in favor of the Performance Rights Act in 2009, a bill that, if passed would have allowed musicians to share in the huge profits that terrestrial radio makes off their music, and leveled the playing field between terrestrial and digital radio. Clear Channel, one of the biggest radio conglomerates, recently acknowledged that musicians still aren’t being fairly compensated. The tide seems to be turning, and many feel we’re on the verge of minting an historic compromise.
Yet new legislation in Congress known as the “Internet Radio Fairness Act” could set us back decades. Instead of ensuring that terrestrial radio stations pay musicians fairly – just as many digital radio stations already do – it would allow the digital platforms to pay musicians less too, at rates far below market value. The bill would effectively unleash a race to the bottom, with radio platforms competing to see which can pay musicians the least. Rather than emulating the one corner of the digital music industry that seeks to give artists their fair share, it attacks that example at the expense of struggling artists -- all with the goal of further enriching companies that already make their money off artists’ backs. People I know are already calling the bill by a more appropriate name: the “Internet Radio Rip-off Act.”
It’s discouraging that Pandora, a digital radio company that has been so pro-artist in the past, now seems to be leading the charge to support this anti-musician legislation – as evidenced by founder Tim Westergren’s recent column in the Huffington Post.
Westergren is absolutely correct that it’s unfair that Pandora pays artists while AM/FM radio doesn’t; but that disparity doesn’t mean that everyone should pay artists less. And Westergren’s claim that Pandora cannot afford to pay artists fairly doesn’t add up either. The company just completed a wildly profitable IPO, has an explosive user base, maintains one of the world’s most-recognizable music brands, and remains the industry leader.
Moreover, paying royalties to musicians isn’t stopping new Internet companies from entering the market, as Westergren argues. The Internet radio market has grown 33 percent over the past five years. Westergren suggests that artists would actually earn more if Internet radio stations paid them less, because there would be more Internet radio stations. To me, it sounds more like a clever way for Pandora to make billions in profits by cheating artists out of their fair share of the internet radio revenue pie. Excuse me for being cynical about that kind of thing – it’s a tough business.
In fact, it sounds a lot like the arguments AM/FM radio continues to make in defense of the arcane loophole that allows them to earn tens of billions of dollars off hit songs without paying musicians a penny. ‘It’s free advertising for artists,’ they say, so they shouldn’t have to pay. But when was the last time a corporate over-the-air radio station broke a new artist, or even played a song that wasn’t already shooting up the charts? AM/FM radio is only interested in milking established acts for every advertising dollar they’re worth, without passing a fraction of the revenue on to musicians.
Indeed, that’s exactly what musicians are asking for: a tiny fraction of advertising revenue. Even Internet radio stations like Pandora pay musicians a small fraction of a penny per performance. That’s the miniscule price to support the musicians that give life to the songs we love, and bring joy to the world. Paying musicians isn’t an inconvenience to radio’s business model – it’s an essential part of it.
All radio companies should pay for the privilege (and the profit) of using other peoples’ art, regardless of whether they’re broadcasting over the air or over the Internet. Musicians agree on that, and it’s also what occurs in virtually the entire developed world. But we don’t think we should be ripped off in the process. The Performance Rights Act of 2009 leveled the playing field between Internet and AM/FM radio and also guaranteed that musicians would be paid performance royalties at market rates. If Congress works from that baseline, it could craft a comprehensive solution that would be fair to all, not just to some.