EFF Joins Internet Radio Fairness Act Bandwagon

Supports Net Radio Fairness

Non-profit digital rights group ELECTRONIC FRONTIER FOUNDATION has thrown its support on the INTERNET RADIO FAIRNESS ACT. The bill, already backed by CLEAR CHANNEL MEDIA + ENTERTAINMENT, CONSUMER ELECTRONICS ASSOCIATION (CEA), DIGITAL MEDIA ASSOCIATION (DIMA) PANDORA, SALEM COMMUNICATIONS and SMALL WEBCASTER ALLIANCE (SWA), would lower royalties Net radio pays to the level of satellite radio.

"Congress gave older, more established companies a leg up," its editorial explained. "For satellite and cable radio, the judges set prices to give the labels and artists a 'fair return' and the music service a 'fair income.'  In practice, the judges tell these services to pay about 10% of their revenues to the artists and labels. For Internet radio, though, the judges are supposed to set rates based on what a "willing buyer and a willing seller" would do in an open market. This sounds pretty good, except that there is no open market, so there’s no consistent benchmark. As a result, judges have set Internet radio royalty rates at cripplingly high levels. Internet stations went to CONGRESS twice, in 2008 and 2009, to get temporary relief from rates that would have put them out of business. Today they pay about 50% of their revenues to SOUNDEXCHANGE.

"What's the right answer? it concluded. "It's tempting to say that the government shouldn't be setting the price of digital streaming any more than the price of milk, metal, or microchips. Downloadable music stores like iTUNES and interactive streaming services like SPOTIFY have to stand or fall in the free market. But CONGRESS recognized that the market wasn't working for digital radio - negotiating licenses was too expensive and bargaining power was too out of balance to let these new technologies thrive, which is why it authorized the Royalty Board to step in. As long as the government is setting these rates, they should be using the best, fairest process possible. The INTERNET RADIO FAIRNESS ACT will help make that happen."

Read the entire EFF editorial here.

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