TL;DR Pandora is touting their huge music performance fees to push legislation that would actually decrease those fees. This invalidates the entire argument except for Tim’s already ill-supported last paragraph.
I’m not buying Tim Westergren’s latest rhetoric begging popular support of the Internet Radio Fairness Act. Here’s why.
Pandora pays performance fees to a company called SoundExchange, a non-profit authorized by the Librarian of Congress to collect and disburse royalties for public performance of copyrighted sound recordings. They also pay some royalties directly to labels. When Tim says Pandora has to pay $1 million for Coldplay, what he really means is that SoundExchange and the record labels split the $1 million and some small percentage actually makes it into the pockets of artists. Coldplay doesn’t get the whole million bucks. The $50,000 for 800 artists, which Tim touts as above the average American household income, actually dilutes to much less than $50,000 before the artist sees any of it. The publishers still win.
Pandora’s original argument for IRFA was the unfair advantage of terrestrial and satellite radio stations, which do not have to pay performance fees as high as Internet radio companies. The legislation would put Internet radio on equal footing with traditional radio, lowering the fees Pandora must pay. If that happens, Pandora will start paying much less than $10,000 for the late Oscar Peterson’s music. So much for Tim’s “champion of the underdog” sob story.
The post concludes this way:
Making performance fees fair for internet radio will drive massive investment in the space, accelerating the growth of the overall sector, and just as importantly accelerating the development of new technology that leverages the incredible power of the internet to build and activate new audiences. That’s where the great opportunity lies in the long run. The short-term reduction in revenue would be rapidly swamped by the overall growth of the sector.
Brownie points for the grand vision, but I need evidence before I’ll believe the prognostication.