Pandora Abandons Its Royalty-Slashing IRFA Legislation…

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This has been brewing for several weeks, but now it’s official: after heavy opposition and destructively-bad PR, Pandora has decided to walk away from its Internet Radio Fairness Act, or IRFA.  The legislation, painted by Pandora founder Tim Westergren as a solution to equalize radio royalty rates and generate more income for everyone, was fiercely opposed as a mechanism to merely cheat artists through lowered royalty rates.

Representative Jason Chaffetz, a major Pandora supporter, told The Hill that another version of IRFA could hit the House floor.  But at this point, without Pandora’s backing, the initiative seems completely dead.  Apple, which largely struck its own deals with rights owners, has little interest in this sideshow.

This doesn’t mean Pandora is giving up entirely, they just need to do it more quietly.  “Pandora will focus on other paths of resolution,” a Pandora press person stated, while referring to an under-the-radar process involving the Copyright Royalty Board.  Pandora’s Tim Westergren now has a policy of not corresponding with Digital Music News, based on ‘unfavorable’ coverage of IRFA, massive stock cashouts, and a very questionable campaign to rally artist support.

Opponents came from all corners on this one, including a massive number of songwriters and artists.  The latter category included names like David Lowery and Pink Floyd, both of whom excoriated Pandora and Westergren for attempting to trick artists into debilitatingly-low royalty structures.  The recording industry, including the major labels, also opposed IRFA and successfully rallied public and artist opinion against Pandora’s efforts.

 

14 Responses

  1. Anonymous

    YES, first huge victory over the anti-music crowd!

    Musicians have power now. Use it!

    • Me

      Cool. Now let’s get terrestrial radio stations to start paying artists.

      • Anonymous

        They don’t do that where you live?

        Then it’s certainly about time.

  2. Paul Resnikoff

    Tim Westergren has now issued a statement to Digital Music News, passed by a Pandora press person:

    “As it relates to IRFA, given the calendar, we are pragmatic and recognize the low probability that Congress will address this issue in the near term. However we thank the sponsors of the bill in the last Congress, Representatives Chaffetz, Polis, Lofgren and Senator Wyden for their continuing efforts to ensure a vibrant and thriving music industry. In the meantime, Pandora will focus on other paths to resolution, including the upcoming CRB arbitration, for which we have been preparing intensively for some time. Pandora remains fully committed to benefiting and growing the entire music industry through a responsible/sustainable royalty structure and ensuring that artists can distribute their music and continue to be fairly compensated for their work and creativity.”

    • TuneHunter

      Tim has no reason for apology.
      He is sitting on hot caldera that might ignite the fire and leap-frog the industry into 100B spot!

      First, radio, including Pandora should be the last to pay any royalties – radio should be converted to plain digital music store. NO KIDDING! Yes simple music store. Both terrestrial and internet Radio.

      Second, same folks who own Pandora also own Soundhound (approx. 300M users) if they start to work as a tandem Sony’s Gracenote will follow into discovery moment cash.

      THEN we have to merge with, take it over or ask a friend investor to snatch Shazam.

      At this point we WILL LOCK MOST OF THE MUSIC IN NEW WALLS. No info for common theft available.
      Monetization will start at once and all radio stations can convert themselves into music stores!
      Radio serves (with NO ID) – Shazams collects cash and delivers the goods! EXCCCITING!

      Musicians can pull the goods from streamers and the Tube! Radio DJ becomes your best discovery friends and micro-label promoters.

      We can sale! No reason for free, semi-free or ad supported CRAPPPPP!

  3. Yves Villeneuve

    Here is what the total radio royalty rate should be (Internet, satellite and terrestrial):

    Avg price of a song X Normal royalty % / Average listens per average song / Non-interactive downgrade multiple X Percent of radio listening population who don’t buy music =

    1.15 X 70% / 80 / 2 X 61% = 0.003

    Label/Publisher (50%) = 0.0015
    Artist/Songwriter (45%) = 0.00138
    Session Musician/Producer (5%) = 0.00012

    Since I’m not knowledgeable enough in this area, the CRB can work out the shares between the Label and Publisher, Artist and Songwriter, Session Musician and Producer.

    • Casey

      If you want radio to die the day that would go into effect, then sure. No way terrestrial radio can spend that kind of money. Internet radio would be forced to go subscription only or simply refuse to pay.

      • Yves Villeneuve

        Sorry Casey. You’re just fear-mongering. I’m pretty sure large Internet radio companies already pay this. It’s up to Pandora to determine which 21 million of its 70mm subscribers are its American subscribers so that it can raise ad prices because of better ad targeting for its advertisers. ITunes Radio does not have this problem.

        • Casey

          Virtually no internet radio companies pay anything close to $0.003 per performance. The majority pay sound exchange and the PROs. You can go to Sound Exchange’s website and see what those rates are, but you won’t find any that are close to $0.003 for 2013. Some like iTunes Radio have direct licensing deals. I know you think iTunes Radio pays Sound exchange too on top of the per play they pay the labels, but they don’t. They have totally bypassed Sound Exchange with their direct licensing deals. What rate they pay in the end we may never know, but the set rate plus a small percent of adverting revenue is probably not going to come close to $.003. Terrestrial radio pays only the PROs. I don’t know what the rate is per performance, but if they have to pay artists and labels that high of a rate on top of their current royalties, many radio stations would simply shutdown overnight. Their margins simply can’t allow for it.

          As far as ad prices, companies really can’t simply raise their prices at any time. If a radio station tries to raise their prices, the advertiser is simply going to say “this is my budget” and their budget won’t be the price you are asking. You either have to accept the price or they will walk to one of your competitors. Radio advertising is an extremely cut-throat industry, internet or terrestrial.

          • Yves Villeneuve

            There is so much falsehood in your post I am just going to ignore it.

          • Casey

            Go on ahead and ignore me. But you really shouldn’t spout information off here like you know what you are talking about. Because you don’t. Your grasp of advertising is non-existent and internet radio royalties is elementary at best.

          • Jen

            Casey, while I agree with part of your comment above, I can’t agree with your starting premise that making terrestrial radio stations pay royalties will kill radio. We are talking about conglomerates like Clear Channel, owner of hundreds of stations, who just recently granted a country music label performance rights royalties on all their platforms, including AM/FM radio.

            I think it would be dangerous for some like smaller independent radio stations or valued college radio stations, but why can’t move forward in that direction. Perhaps first in smaller increments and then to healthier price points? And eventually granting full performance rights in sound recordings instead of what we have currently which is an antiquated, erroneous way of looking at music.

      • Anonymous

        “If you want radio to die”

        Nice idea! Why not kill it?

        Artists don’t need it anymore. Especially not in North Korea and the few other countries that doesn’t pay. That’s just piracy.

        • TuneHunter

          Guys, Radio should sale music – no reason for any royalties!

          There is no other way – unless we are monks beating our backs with the whips and observing Sun flying around the Earth. (Read: Observing Tubers and streamers jerking our work away!)

          Musicians, as the song says, let’s knock on RIAA and label’s DOOR!