"When the government sets the rate for music, it is enacting price controls, in opposition to what should be the agenda of a Congress that supports the market economy," Norquist wrote. "Government should extract itself from this debate to allow an environment for negotiations to develop among broadcasters, record companies, artists, and other interested parties."
The Pandora-backed Internet Radio Fairness Act (IRFA) proposes to place Internet radio services on the same royalty-setting standard as cable and satellite radio stations. Norquist said this standard would let Internet radio stations pay "forced below-market rates" to artists and labels for playing their songs.
"While the current so-called 'willing buyer willing seller' model may attempt to mimic a free market negotiation by looking at free market deals as a benchmark, the standard in IRFA moves in an even worse direction towards forced below-market rates," Norquist wrote. "Both the existing and proposed models pick winners and losers, rather than allowing free market negotiations."
Pandora, along with the Consumer Electronics Association and Clear Channel, are in favor of the IFRA. They contend that the current royalty rules have prevented growth in the Internet radio market and discriminate against Internet radio services.
More than 100 recording artists and musicians opposed Pandora's efforts to modify the existing royalty rules for Internet radio services. The AFL-CIO and NAACP have opposed the IRFA.