The Bleak Future of Internet Radio

There are few issues capable of stirring up as much debate in the music industry over the past couple of weeks as much as the Internet Radio Fairness Act, or IRFA. The Internet Radio Fairness Act is a bill that was introduced by the US House of Representatives with the goal to align the royalty payments of internet radio with those of cable and satellite radio. If enacted in its current incarnation, it will cut royalty rates paid to artists by the likes of Pandora and its peers by more than 80%. Yes, eighty percent.

(You can download the bill in its entirety here, if you enjoy that sort of thing)

Pandora founder, Tim Westergren, states that IRFA would allow more opportunities for artists. He states that, while the percentage they would earn per play may be lower, they would ultimately earn more revenue because the lower royalty rate that companies would have to pay, would ultimately lead to the expansion of internet radio. Artists, who for the most part remain collectively against the IRFA, call shenanigans on Westergren and his cronies. They assert that the bill has no concern for opening up the marketplace for competition and that the Pandora team and their ilk have concern for nothing apart from making as much money as possible. At the Future Music Coalition Summit in Washington D.C. recently, musician and college instructor David Lowery, perhaps the most vocal advocate of the cause, spoke on a panel about this matter. In addition to being vehemently against the loss in pay for himself and his peers, while others make money off their talent, he has many issues with the actual phrasing of the bill. Lowery fears that if the bill were to be enacted in its current state, artists could potentially have their first amendment rights stifled or even be prosecuted under the Sherman Act. (For those who don’t know how US legislation works, there is typically much revising and editing to tweak poor phrasing, but Mr. Lowery raises a valid point, to be sure.)

Tim Westergren stated at the FMC summit that, while Pandora does make a profit, they’re “barely holding our head above water.” It’s most likely difficult for artists to take pity on Westergren when making this statement. Given that Pandora was valued at $2.5 billion when it went public last year, and continues to profit, as artists are having an increasingly difficult time finding ways to do so. While IRFA is a very hot topic at the moment, the actual issue has remained the same in the music industry since the days of Napster. Since the internet became a necessity and is becoming more readily available on an increasing number of devices, laws and art have not been able to keep up with it. This has not changed, nor will it. There have always been third parties trying to profit off of the talent of others, the issue now is that they’re more difficult to find and nearly impossible to stop. As much of a shame as it is that Pandora is barely keeping their head above water with their $2.5 billion, the artists who got them there aren’t even doing that.

*Tim Westergren was on the first panel of the day with Greg Kot but I can’t find video of it, if anyone can, please let me know and I’ll gladly put it here as well.

Watch David Lowery’s FMC panel here: http://www.youtube.com/watch?feature=player_embedded&v=Vhn0hg2lXsg

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