Friday 16 November 2012, 13:07 | By CMU Editorial
Artists call on Pandora to stop lobbying for royalty rate cuts
125 musicians, including Bryan Adams, Britney Spears, Katy Perry and Nas, have put their names to an open letter calling on US streaming service Pandora to stop lobbying for a change in the way sound recording royalties for internet radio services are calculated in the US.
As previously reported, while American FM radio stations do not have to pay any royalties to the record labels and recording artists, satellite and internet radio services do, usually via the statutory rights body SoundExchange. But the way sound recording royalty rates are set for satellite and internet services differs, in a way that, most reckon, means satellite broadcasters get a better deal.
Pandora, therefore, has been busy lobbying with the likes of Clear Channel, which now operates online music service iHeartRadio, for a change to the laws that govern US sound recording royalties, via a thing called the Internet Radio Fairness Act, to bring satellite and internet services in line with each other. Such a move should cut Pandora’s royalty obligations to the labels.
But, while Pandora claims that it is just looking for a fairer deal compared to its competitors (actually, given FM radio is still currently royalty-free on the recordings side, things are still stacked against the digital firm), many in the label and artist community have hit out at the Internet Radio Fairness Act, arguing that Pandora has built a business worth $1.2 billion (by current market cap) using the music industry’s content, and is now trying to share less of its revenue with the music community. Of course you could argue the $1.2 billion valuation is way over the top, though Pandora management themselves cannot say such a thing (though they might confidentially point out that, as it is, the company has lost half its market cap valuation in the last year).
But whatever, in an open letter organised by musicFirst and SoundExchange, and signed by a plethora of artists, music types criticise Pandora’s royalty moves. The letter reads: “We are big fans of Pandora. That’s why we helped give the company a discount on rates for the past decade. Pandora is now enjoying phenomenal success as a Wall Street company and skyrocketing growth in revenues and users. We celebrate that”.
It adds: “At the same time, the music community is just now beginning to gain its footing in the new digital world. Pandora’s principal asset is the music. Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair, and that’s not how partners work together. Congress has many pressing issues to consider, but this is not one of them. Let’s work this out as partners and continue to bring fans the great musical experience they rightly expect”.
The letter doesn’t reference Pandora’s separate efforts to cut the royalties it has to pay to songwriters and music publishers by suing collecting society ASCAP. The streaming firm, caught between nervous shareholders and increasingly tetchy artists and rights owners, is yet to respond to the letter.
The signatories list in full: Bryan Adams, Alabama, Greg Allman, Steve Angello, Rodney Atkins, Sara Bareilles, Big Bad Voodoo Daddy, Clint Black, Jack Blades, Blondie, Jonatha Brooke, Jackson Browne, Jimmy Buffett, Oteil Burbridge, The Cab, Colbie Caillat, Camper Van Beethoven, CoCo Carmel, George Clinton, Keyshia Cole, Common, Easton Corbin, Cowboy Mouth, Cracker, Randy Crawford, Robert Cray, David Crosby, Joel Crouse, Sheryl Crow, Drew Davis, Taylor Dayne, Dead Kennedys, Raheem DeVaughn, The Doors, Down, The Dream, Vikter Duplaix, Missy Elliott, Lupe Fiasco, The 5th Dimension, Flyleaf, John Fogerty, Guy Forsyth, The Game, Vince Gill, David Gilmour, Genevieve Goings, Martha Reeves, Rihanna, Eric Roberson, Darius Rucker, Rush, Bobby Rush, Joe Sample, David Sanborn, Skid Row, Michael W Smith, Britney Spears, Dave Stewart, Survivor, T.I., Susan Tedeschi, Robin Thicke, George Thorogood, Toto, Butch Trucks, Derek Trucks, Josh Turner, Frankie Valli and Bob Gaudio (The 4 Seasons), Dionne Warwick, Roger Waters, Bobby Whitlock, Whodini, Chuck Wicks, Otis Williams (The Temptations), Ann and Nancy Wilson (Heart), BrianWilson, BeBeWinans, Zac Brown Band, Andy Grammer, Amy Grant, CeeLo Green, Gyptian, Warren Haynes, Don Henley, Hootie And The Blowfish, Mallary Hope, Bruce Hornsby, Mick Hucknall (Simply Red), The J.Geils Band, Jaimoe, The Jazz Crusaders, Billy Joel, John Paul Jones, Mick Jones (Foreigner), Journey, Jim Kerr and Charlie Burchill (Simple Minds), KISS, Jana Kramer, Ludacris, Maroon 5, Nick Mason, Duff McKagan, Megadeth, Janelle Monae, Alissa Moreno, Jason Mraz, Nas, Graham Nash, Ne-Yo, Stevie Nicks, Night Ranger, Ted Nugent, Owl City, Christina Perri, Katy Perry, Pink Floyd, Robert Plant, John Pointer, The Pointer Sisters, Primus, Marc Quinones, Joel Rafael, Trisha Yearwood, Bonnie Raitt.