Pandora now pushing radio to pay for music, too

US radio stations don't pay performers and producers for the music they play, but the recording industry hopes to change that with a new performance rights bill in Congress. Webcaster Pandora has jumped into the fray on the side of the artists and labels, asking why radio gets a free ride when Pandora does not.

By Nate Anderson Last updated July 13, 2009 12:55 PM CT

The campaign to get radio stations to pay up for the music they play marches on. With revenues from recorded music sales declining, rightsholders have turned their eyes in recent years to commercial US radio, which currently pays songwriters (but not performers or record labels) for the tunes that power their business.

The record labels now have Pandora on their side. The influential webcaster just wrapped up its own music licensing negotiations with rightsholders last week as both sides at last agreed to a deal that each could live with. With its own future secure for the next few years, Pandora is now turning its attention to the public performance debate here in the US, saying that the issue is a simple matter of fairness: why should webcasters have to pay more for music than traditional radio does?

In an e-mail to Pandora supporters last week, founder Tim Westergren called the current system "fundamentally unfair both to Internet radio services like Pandora, which pay higher royalties than other forms of radio, and to musical artists, who receive no compensation at all when their music is played on AM/FM radio." He went on to ask readers to call House Majority Leader Nancy Pelosi's office to request her support on the Performance Rights Act that would force radio to start paying a performance royalty to rightsholders.

Radio, of course, continues to claim that it is, in some special way, a promoter of music and that it drives tremendous interests in artists. That interest, in turn, is supposed to translate into increased album sales, ticket sales, and publicity opportunities.

Why this effect would suddenly cease to apply once one starts streaming the music on the Internet via satellite (even if the scale might currently be more limited) remains unclear; certainly, a powerful case for harmonization can be made, though the "fairness" argument could clearly go either way. Radio might start paying a performance right; on the other hand, perhaps webcasters and satellite radio companies should simply stop paying one, relying on the old argument about promotion.

The US is certainly an anomaly when it comes to radio stations—something the recording industry never tires of pointing out. As global music trade group IFPI noted in its most recent annual report, "Extraordinarily, it is in the US, the world's largest music market, that has traditionally championed intellectual property rights, that performers and producers have no rights to be paid when their music is broadcast over the radio. Other countries without broadcast rights are Rwanda, China, Iran, and North Korea."

Broadcasters, in turn, point out that most of the money paid by radio would go to "foreign-owned record labels"—a reference to EMI (UK), Universal (part of Vivendi, which is French), and Sony (Japanese). This isn't really a logical attack on the fairness issue as raised by Pandora and others, but it probably has some pull in Congress anyway.

After all, who wouldn't want to support home-grown radio behemoths like Clear Channel instead of horrible foreigners who live in London and Paris and Tokyo? U-S-A! U-S-A!

Source:

http://arstechnica.com/tech-policy/news/2009/07/pandora-now-pushing-radio-to-pay-for-music-too.ars