Pandora, Clear Channel, Others Form Lobby Group for Lower Web Radio Payments; MusicFirst Pushes Back

Pandora and Clear Channel are among the founding members of the Internet Radio Fairness Coalition, a collection of companies, trade associations and advocacy groups announced today that are throwing their weight behind bills that aim to lower the rates webcasters pay for the performance of sound recordings. 

The group's namesake is the Internet Radio Fairness Act of 2012, legislation that seeks lower webcaster royalties by changing how the Copyright Royalty Board (CRB) sets rates. The proposed legislation would replace the "willing buyer and willing seller" standard with the 801(b) guidelines used by satellite radio and cable. Using the 801(b) guidelines would allow the rates to be set using criteria that take into account the public interest, the return earned by copyright owners, the minimization of risk in the industry, and the interplay between creative contribution and capital investment. 

Other founding members of the coalition include Consumer Electronics Association, terrestrial broadcaster Salem Communications, AccuRadio, Small Webcaster Alliance and Computer and Communications Industry Association. 

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Record labels and webcasters have different definitions of fairness. Record labels will be putting their support behind a bill, currently in draft form, by Congressman Jerrold Nadler that proposed to bring satellite radio and cable radio rates up to the level of webcasters. 

Each side should have a chance to speak on the record soon enough. Sources say a Congressional hearing is likely in either late November or early December. 

Clear Channel has already found some market-based solutions. The company has negotiated direct licenses with Big Machine Label Group and Glassnote Entertainment that cover both terrestrial and webcasting royalties. Terms of those deals have not been disclosed. 

"We believe that market-based solutions are the way to go," said Bob Pittman, CEO of Clear Channel. "But in the absence of these agreements, the CRB needs to have and consider more relevant information so they are better  able to develop a rate structure that will lead to a healthy, sustainable Internet radio marketplace." 

musicFIRST quickly came out against the creation of the coalition. Executive Director Ted Kalo said in a statement that supporters of the bill were trying create momentum where none exists. "This bill is now commonly known as the 'Screw Artists Act' because it would produce a windfall to millionaires, mandate a pay cut for artists, and provide no benefits to subscribers." 

The organization says artists, music creators and other people wrote over 11,000 letters to Congress opposing the Internet Radio Fairness Act last weekend.