Pandora: Our Royalty Rates are ‘Astonishingly Unfair…’

So who’s right?

Is Pandora screwing artists, or getting screwed by SoundExchange, Congress, and the majors?  Pandora cofounder Tim Westergren wants parity with other radio formats, but parity also means ‘cheaper’ as well.  Which is why New York Representative Jerrold Nadler is proposing a different sort of parity, one that would lift rates for all newer formats to Pandora levels.

It’s called the “Interim FIRST Act,” and it’s predictably hated by every new radio technology.  And of course, applauded by recording industry – and likely, many artists who are watching.  This situation is getting worse, not better.

So there’s your parity, Pandora! The only problem is that outsized rates could severely cripple emerging radio technologies, and result in fewer paying parties.  Accordingly, Westergren’s been biting back, and pointing to a competing parity act proposed by Utah Representative Jason Chaffetz that lowers his rates towards so-called 801(b) levels.  He offered this in a statement…

“The current system for establishing royalty rates is astonishingly unfair. Fairness demands that all music related rate settings utilize the same 801(b) standard.”

There’s a perplexing wrinkle in Nadler’s plan, though: terrestrial radio stations would still avoid paying royalties on streaming recordings, just like before.  Sounds like a difficult, separate fight that features a very strong radio lobbying force (ie, the NAB).  But Nadler wants to compensate for this inequity by raising rates on internet streams of traditional broadcast stations.  Which means that overall, at least, streaming rates would increase (on average).

“The lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair. We can’t start a race to the bottom when it comes to royalty rates and compensation for artists.  The Interim FIRST Act would provide artists with fair compensation for the valuable creations they share with all of us.”