Corker rallies opposition to Pandora-backed royalty bill

The bill proposes to place Internet radio services on the same royalty-setting standard as cable and satellite radio services, such as SiriusXM, so the royalty fees paid by each radio platform are level with one another. Pandora has argued that it unfairly pays higher royalty fees than other digital radio services, noting that more than half of its revenue this year will go towards royalty payments. Cable and satellite radio stations, on the other hand, will pay less than 15 percent of their revenue in royalty fees, according to Pandora.

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Wyden, the bill's chief sponsor in the Senate, argued at a conference last month that the current royalty rules for Internet radio are obsolete and favor the recording industry over burgeoning Internet radio stations. If Pandora and other webcasters paid lower royalty fees, recording artists and musicians would earn more money because there would be a larger market for Internet radio stations, Wyden contends.

Clear Channel, Pandora and the Consumer Electronics Association are some of the top supporters of the bill. But it has received pushback from major players in the music industry, NAACP and some conservative groups like Grover Norquist's Americans for Tax Reform.

Corker takes a similar line as Norquist when opposing the bill, arguing that "marketplace benchmarks" should determine royalty payments and the government should keep its hands out of the matter.

"We all want Pandora — and Internet radio — to succeed and grow. But it can do so without legislation and without harming the artists it relies on," Corker writes. "A consumer-driven marketplace has been a hallmark of innovation on the Internet and the same market forces should decide the value both of competing music delivery services and the music content they deliver."

"[P]arity should be based on free market principles and achieved in a comprehensive way that levels the playing field for all copyright holders and across all mediums of music," he adds.

As a senator for Tennessee, Corker's constituents include representatives from the country music hub of Nashville. Corker received $201,241 from the TV, movie and music industries during the 2012 election cycle, according to the Center for Responsive Politics.

Greg Barnes, general counsel of the Digital Media Association, countered that music royalties are a key part of copyright law, which falls within Congress' purview.

“The free market is important but the enduring purpose of our Constitution’s copyright clause is to 'promote the progress of science and the useful arts,'" Barnes said. “This is an awesome responsibility so important that our founding fathers didn’t entrust the private markets to handle such matters. They entrusted Congress.”

Reps. Jason Chaffetz (R-Utah) and Jared Polis (D-Colo.) introduced IRFA in the lower chamber. The House Judiciary Committee weighed the bill at a hearing last week, where Pandora CEO Joe Kennedy and representatives from the music industry clashed over the merits of the measure. Members of the committee, including Reps. Mel Watt (D-N.C.) and John Conyers (D-Mich.), were critical of the bill.  

-- This story was updated at 5:36 p.m.

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