Utah Congressman Proposes Lowering Webcaster Royalty Rates
July 19, 2012 at 3:20 AM (PT)
Webcasters and the music industry are taking their battle over royalty payments to Capitol Hill. THE HILL reports, "Rep. JASON CHAFFETZ (R-UTAH) is crafting legislation that would put Internet radio services such as PANDORA on the same royalty-setting standard as other digital radio services. The proposal is stirring concern from the music industry, which has moved aggressively to protect its revenue as consumers shift to buying and listening to music online."
Webcasters currently pay a different royalty rate than do operators of cable and satellite radio stations. The deal that set those rates in 2009 is set to expire in 2015, and CHAFFETZ said the royalty rates discriminate against Internet stations by forcing them to pay much higher rates to stream music than do other digital radio services. He says his bill would simply level the playing field.
"It seems screwy that royalty rates change so dramatically based on the platform," CHAFFETZ told THE HILL. "When you're listening to music in your house or in your car, you may be listening to it on your iPHONE, you may be listening on the satellite radio or the FM radio. Does that mean the royalties should be so vastly different? It doesn't seem to make sense to me. We need to play catch-up here."
PANDORA is firmly behind CHAFFETZ, with founder TIM WESTERGREN saying, "The current royalty rate structure clearly favors some providers over others, and the discrimination against Internet radio must come to an end. Congress has an opportunity to enact legislation that will not only establish fair royalty rate-setting standards for Internet radio, but also drive more innovation in legal digital music distribution and treat artists as stakeholders."