Three Songwriter Organizations Oppose Internet Radio Fairness Act
Three Songwriter Organizations Oppose Internet Radio Fairness Act

The debate over Internet radio royalties is headed to Washington D.C. The House Judiciary Subcommittee on Intellectual Property, Competition and the Internet will hold a hearing on Wednesday, November 28 on the topic of music licensing.

No witnesses have been announced. Billboard.biz expects representatives from Pandora, a radio broadcaster such as Clear Channel, a representative from SoundExchange and a performing artist to testify and answer questions from committee members.

Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions

The hearing makes good use of idle time at the end of the 112th Congress. The Internet Radio Fairness Act will be re-introduced in Congress next year, sources tell Billboard.biz. It's also likely that a competing bill by Jerrold Nadler, currently in draft form, will be introduced this year. The Nadler bill, supported by SoundExchange and record labels, calls for the CRB to use the "willing buyer, willing seller" standard for all digital services, thus bringing satellite radio and cable radio to the same standard as Internet radio.

The bill, sponsored by Jason Chaffetz and Jared Polis in the House and Ron Wyden in the Senate, would instruct the Copyright Royalty Board, which sets statutory rates for digital performances, to use a different standard when setting rates for Internet radio companies. Under an 801(b) standard, the CRB would be allowed the consider a range of factors that includes the maximization of availability of creative works to the public, a fair return for the copyright owner and a fair income for the copyright user. The current standard used for Internet radio, the "willing buyer, willing seller" standard, is more narrowly focused and tries to replicate a market-based transaction.

Business Matters: Internet Radio Bill is About Fairness -- and Money

The debate over the Internet Radio Fairness Act has been heated. An open letter signed by 125 musicians -- which ran as an advertisement by musicFIRST and SoundExchange in Billboard -- criticized Pandora for seeking a process that could give it a lower statutory royalty rate.

Artists have weighed in, too. An article at Pitchfork by Damon Krukowski (Galaxie 500, Damon & Naomi) bemoaned the speculative business models of Pandora and Spotify that pay "ridiculously low" royalties and "are doing nothing for the business of music."

Questions? Comments? Let us know: @billboardbiz

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