Internet Radio Fairness Act Slips Into Hibernation

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Despite some triumphant claims on Twitter, the Internet Radio Fairness Act isn't really dead. It's just hibernating.

The controversial bill, supported by the likes of Pandora and Clear Channel and opposed by groups representing artists and sound-recording owners, would change the standard by which Internet radio royalties are set by a panel of judges.

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

Neil Portnow, President and CEO of the Recording Academy, claimed victory Thursday when he sent an email to Recording Academy members thanking them for their help in opposing the bill. "Congress listened to you- and we won," he wrote. "The 112th Congress just concluded and IRFA is officially defeated."

IRFA is indeed dead for now, but it was really killed by the calendar. Introduced late in the 112th Congress, IRFA was unlikely to be passed before the 113th Congress was sworn in today. Instead, it set up a political fight that is expected to carry on for years. Sources say the bill's momentum was sapped at the November 29th hearing in Washington. Lawmakers criticized the National Association of Broadcasters representative for seeking lower online royalty rates even though terrestrial radio stations do not pay sound recording owners a performance royalty. The year ended without the bill going into markup and receiving a vote in committee.

Although the hearing did not go well for IRFA, the bill seems like a good bet to be introduced again in 2013. Since Its passage could lower digital music services' royalty obligations by hundreds of millions of dollars. Insiders tell the new bill could be re-introduced under a different name and could have different language than the one seen last year.