SoundExchange Expresses Disappointment With CRB's New Royalty Rates

Not Everyone Got What They Wanted

YESTERDAY (NET NEWS 12/16), ALL ACCESS reported a panel of federal judges increased the royalty that free Internet radio services like PANDORA will pay record companies for the next five years, a decision that has been closely watched in the music industry and on WALL STREET.

“This is a balanced rate that we can work with and grow from. The new rate structure will enable continued investment by PANDORA to drive forward a thriving and vibrant future for music,” said PANDORA CEO BRIAN MCANDREWS. “Working collaboratively with partners across the music industry is a top priority as we connect listeners with music they love, and artists with their audience. This decision provides much-needed certainty for both PANDORA and the music industry. We are moving full-steam ahead with our ambitious plan to continue to build the world’s most powerful music discovery platform.”

While almost everyone seemed happy with the ruling, SOUNDEXCHANGE expressed disappointment. “It’s only fair that artists and record labels receive a market price when their music is used,” they said in a statement. “We believe the rates set by the CRB do not reflect a market price for music and will erode the value of music in our economy. We will review the decision closely and consider all of our options.”

THE NEW YORK TIMES notes, "For years, Internet radio services have operated under two different rate systems: one for so-called pureplays like PANDORA -- businesses that operate mainly on the Internet -- and another for traditional broadcasters like the radio giant iHEARTMEDIA that also have web streams. As a result of a settlement with the music industry in 2009, the pureplay companies paid record labels a lower royalty rate for web streams than the broadcasters did. The rates announced by the copyright judges on WEDNESDAY eliminate that distinction, aligning the web rates of companies like PANDORA with those of commercial broadcasters. So while PANDORA’s rate for its free version -- which has advertising -- will increase to 17 cents from 14, for outlets like iHEARTRADIO, the rate will decline from 25 cents."

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