Chart-topping singers oppose Pandora's push for changes to music royalty rules

A coalition of 125 chart-topping singers and musicians — including Pink Floyd, Britney Spears and Rihanna — are speaking out against Pandora's efforts to modify the music royalty system.

In an open letter released on Wednesday, the group questions Pandora's push for Congress to enact changes to existing royalty-setting rules. The singers and musicians argue that Pandora "is now enjoying phenomenal success as a Wall Street company," including "skyrocketing growth in revenues and users."

"Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon?" the letter reads. "That's not fair and that's not how partners work together."

Pandora has launched an all out lobbying push for lawmakers to support a bill that would put Internet radio services on the same royalty-setting standard as cable and satellite radio stations, which it believes may lower the royalty fees it pays to stream songs on its service. That push has put Pandora at odds with the music industry, which contends that the Internet radio company is more concerned with its bottom line than fairly compensating artists and musicians.

The letter, which was also signed by Katy Perry and Billy Joel, will be published this weekend in Billboard Magazine. It was released on Wednesday by musicFirst and SoundExchange, two organizations that represent musicians and artists in the recording industry. They argue that the Pandora-backed bill, the Internet Radio Fairness Act (IRFA), could cut royalty payments paid to musicians and artists by 85 percent.

SoundExchange is responsible for collecting royalty fees from Internet, satellite and cable radio stations and distributing the money to recording artists and representatives that own the rights to a song.

In the letter, the singers and musicians said they "celebrate" Pandora's success as a publicly traded company but note that "the music community is just now beginning to gain its footing in this new digital world."

"Congress has many pressing issues to consider, but this is not one of them," the letter reads. "Let's work this out as partners and continue to bring fans the great musical experience they rightly expect."

After years of legal wrangling, a deal was struck between record labels and Internet radio services in 2009 that set royalty rates for streaming music online, but the terms of that settlement are set to expire in 2015.

Pandora argues that it unfairly pays higher royalty fees than cable and satellite radio stations because Internet radio is placed on a different royalty-setting standard. The company is pushing for the IRFA to pass before the terms of the royalty settlement expire. The bill is sponsored by Sen. Ron Wyden (D-Ore.) and Reps. Jason Chaffetz (R-Utah) and Jared Polis (D-Colo.).

Tim Westergren, the founder of Pandora, said in a statement that Internet radio companies "would have been paying over 100 percent of their revenues in royalty fees" if Congress hadn't intervened during the rate negotiations in 2009 and the industry wouldn't have survived.

“The short-term solution is about to expire and we believe there should be a permanent fix," Westergren said.

The IRFA would create a sustainable environment for the Internet radio industry, which will ultimately benefit all artists, he argued.

"Passage of the IRFA will mean more jobs in a sustainable industry, more choices for listeners, and more opportunities and revenue for working artists and their record labels," Westergren said. "When the digital music sector is allowed to grow and innovate, everybody wins.” 

The House Judiciary Committee is expected to hold a hearing on the IRFA and music licensing issues at the end of the month.

“These artists have joined together to tell Pandora it’s time to go back to the drawing board. We all want Internet radio to succeed, but it won’t if it tries to do so on the backs of hard working musicians and singers,” said Ted Kalo, executive director of musicFIRST, in a statement. 

-- This post was updated at 3:56 p.m. with a comment from Pandora.