Yes, there are actually companies that want to pay artists and labels fairly. But what if that’s simply an impossible task financially? “Believe me, radio broadcasters want to take advantage of all the possibilities the internet presents, but these royalty rates create a financial disincentive to webcast, and solving this problem for broadcasters is essential,” Steve Newberry, CEO of Commonwealth Broadcasting Group just told Congressional lawmakers, on behalf of the NAB.
“While we might disagree on some points, we’d both agree that the Copyright Royalty Board set a rate structure that has suffocated the expansion of this industry.”
Which is what guys like Pandora founder Tim Westergren have been saying all along. Westergren was a struggling musician before he was a struggling entrepreneur, and he wants artists paid. But his company has so far been unable to ramp premium subscriptions, advertising, or both to a profitably-sound level. “Beneath this exciting transition is a severe and fundamental problem,” Westergren testified. “While Pandora and other internet radio services compete directly with broadcast and satellite radio for listeners in every place you find music – the home, the car, the office, on the go – we are subject to an astonishingly disproportionate royalty burden compared to these other formats.”
Sounds hopeless, except that the industry is now taking the power back. In fact, just before this day-long, ‘Future of Audio’ hearing on Capitol Hill, Clear Channel and Big Machine announced their momentous, independent royalty arrangement (on multiple formats). Cary Sherman, the bloatedly-overpaid chief of the RIAA, spoke against a ‘label-by-label piecemeal solution,’ but lawmakers applauded the legislation-free dealmaking.
By the way, Sirius XM Radio is also doing the same thing – and suing SoundExchange, A2IM and other industry groups for cock-blocking the effort. Maybe Westegren and company are simply being too nice.
