Pandora backs bill to cut internet radio royalty rates

Pandora co-founder Tim Westergren has lent his support to a bill introduced in the US House of Representatives on Friday, as well as its companion legislation in the Senate, which aims to reduce the rate of royalties paid by internet radio stations. Put forward by Representatives Jason Chaffetz (R-Utah) and Jared Polis (D-Colo.), the Internet Radio Fairness Act proposes putting internet radio stations on the same royalty scale as satellite and cable services — its Senate equivalent was introduced by Senator Ron Wyden (D-Ore.).

Supporters of the bill claim that services such as Pandora currently pay more than 55 percent of their annual revenues in royalty fees, far more than the cut of between seven and 16 percent paid by other digital options. Conventional terrestrial radio stations, moreover, are not required to pay performance royalty fees at all. Writing in a post on the official Pandora blog, Westergren describes the situation as “discrimination against internet radio,” the result of “legislative and legal strong-arming done over a decade ago by the RIAA.”

Predictably, the Internet Radio Fairness Act faces significant opposition from recording industry bodies and their congressional allies, most notably Representative Jerrold Nadler (D-N.Y.), who recently introduced a draft bill pointing in precisely the opposite direction. The Interim FIRST Act aims to place satellite and cable radio royalty rates in line with the higher fees paid by internet services, with Nadler claiming that “the lack of a performance royalty for terrestrial radio airplay is a significant inequity and grossly unfair.”