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Pandora reportedly drops bid to reduce royalty payments

By | Published on Wednesday 27 November 2013

Pandora

Pandora has given up on attempts to convince the US government to pass new legislation to reduce royalty payments for online broadcasters, according to Billboard.

AM and FM radio broadcasters in the US are not obliged to pay royalties for the sound recordings they play (though they do pay money to the music publishers for the rights in the songs). However, satellite and online radio-style services are obliged to pay the labels, but can do so through the Sound Exchange collective licensing system with rates set by statute.

Though because of the way it was all set up, satellite radio – ie Sirius XM – pays lower rates than online services. And to that end, Pandora has been busy campaigning in Washington for a change to the rules, so its royalties would be more in line with what Sirius pays. Though that activity, coupled with other legal shenanigans to cut down what it pays the collecting societies that represent the music publishers, has proven a little controversial in the music and artist community.

It may well be the bad press surrounding Pandora’s support for the so called Internet Radio Fairness Act that has persuaded the policy change at the digital firm, though it doesn’t mean the company has given up trying to get its royalty obligations reduced.

But, according to Billboard, rather than lobbying Congress for a change in the law, it seems Pandora will now focus its efforts on the Copyright Royalty Board, the panel that sets the aforementioned statutory royalty rates. Those are due to be reviewed in 2015, and it seems Pandora hopes that it can persuade the all important judges to bring its royalty obligations down.

Pandora wasn’t the only online music service lobbying for the Internet Radio Fairness Act, though it was its biggest advocate, so much so most people seem to think that those proposals will now fall off the agenda completely on Capitol Hill.

Especially as the two other big players in the personalised radio space in the US – Clear Channel and Apple – are busy negotiating deals directly with the labels, circumventing the statutory licensing system completely (something Pandora hasn’t ruled out trying itself). The boss of record label trade body RIAA therefore noted that Pandora’s change of heart on this issue was “a historic moment” for the music industry.



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