NAACP blasts Pandora-backed Internet royalty bill

The National Association for the Advancement of Colored People (NAACP) has come out against a Pandora-backed bill that would put Internet radio services on the same royalty-setting standard as cable and satellite radio stations.

Hilary Shelton, director of the NAACP's Washington bureau, blasted the Internet Radio Fairness Act in a letter sent to House Judiciary Committee leaders, saying the bill "fails the basic test of economic fairness and discriminates against singers and musicians by slashing the compensation they receive when their work is played over digital online radio." 

Shelton argued that the Internet Radio Fairness Act would "start a race to the bottom in performers' compensation" because it would "mandate that more than 1,800 Internet radio stations pay recording artists and musicians far less than their recordings are worth, just because a very few, older, digital services do."

Reps. Jason Chaffetz (R-Utah) and Jared Polis (D-Colo.) and Sen. Ron Wyden (D-Ore.) introduced the bill last month. They argue that Internet radio stations like Pandora unfairly pay higher royalty fees for streaming songs than satellite and cable radio stations do because they're placed on a different royalty-setting rate.

The Internet Radio Fairness Act proposes to put Internet radio stations 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 stations like SiriusXM. Pandora believes the bill would lower the royalty fees it pays to compensate artists for streaming songs on its service, and also encourage new Internet radio services to enter the market.

But the artists who would get hurt the most by the bill are singers and musicians from the Motown era "who received little pay for their original work," Shelton argued. They are "dependent on this modest performance royalty that would be eviscerated" by changing the royalty-setting standard for Internet radio stations, he added.

The bill is also opposed by the AFL-CIO and the musicFirst Coalition, an organization that represents recording artists, musicians and minority organizations that advocate for performance rights.

Pandora is part of a coalition with Clear Channel Media and Entertainment, the Computer and Communications Industry Association, the Consumer Electronics Association and others to lobby in favor of the bill.