New coalition for Pandora-backed royalty bill launches

A group of tech trade associations and broadcast radio companies and online streaming service Pandora launched a new coalition on Thursday aimed at urging Congress to support legislation that would lower the royalty fees paid by Internet radio stations so they're more in line with the rates paid by other digital radio services.

The Internet Radio Fairness Coalition argues that the current royalty rate-setting standard for Pandora and other Internet radio services is outdated. It contends that the current music royalty rules prevent other Internet-based radio services from getting off the ground because a large chunk of their revenue goes to paying steep royalty fees for streaming songs. 

Instead, the coalition is calling for all digital radio services — including cable and satellite stations — to be put on the same royalty rate-setting standard.

“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,” Tim Westergren, the founder of Pandora, said in a statement. “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.”

The coalition backs a bill introduced by Rep. Jason Chaffetz (R-Utah) and Sen. Ron Wyden (D-Ore.) last month, the Internet Radio Fairness Act, that would put Internet radio services like Pandora on the 801(b) standard of the Copyright Act, which is the same standard used to set the royalty fees paid by cable and satellite radio like SiriusXM for playing a song. The lawmakers argue that the current royalty rules discriminate against Internet radio stations.

The House Judiciary Committee is expected to hold a hearing in November that will examine music licensing issues and the royalty bill.

Other members of the new coalition include Clear Channel Media and Entertainment, the Computer and Communications Industry Association (CCIA), the Consumer Electronics Association, Engine Advocacy, AccuRadio and the Digital Media Association, among others.

"Updated rules would help deliver music to the public in devices of their choice and create a viable digital music business that benefits artists and innovators,” said CCIA CEO Ed Black in a statement.

The Internet Radio Fairness Act has already drawn opposition, however. Groups that represent recording artists, musicians and others in the industry support a competing draft measure from Rep. Jerrold Nadler (D-N.Y.) that would put cable and satellite radio services on the same royalty-setting standard as Internet radio.

The draft bill would also make traditional radio stations pay a higher fee for live-streaming their broadcasts online because they currently do not pay royalty fees to artists for playing their music on over-the-air radio stations.