ONLINE RADIO CLIQUE
FIGHTS FOR REFORM

Broadband is still far from the norm. Cell phones are bricks. President Clinton is “clarifying” the details of his extramarital dalliances.

There’s no iTunes, no Spotify, no iHeartRadio or Pandora. Several prominent figures in the music industry (their names now escape us) have expressed the belief that the Internet will simply go away.

It was during this now-innocent-seeming time that the royalty rates for online radio were cobbled together. As a result, Internet radio providers pay roughly half their revenues in streaming royalties, whereas cable and satellite radio companies pay about 15% and 7.5%, respectively.

We know nobody had a crystal ball, but we can probably agree that the rate structure established at that time didn’t quite anticipate the playing field of 2012.

So argues a new advocacy group, members of which include Clear Channel and Pandora, known as The Internet Radio Fairness Coalition. They’re urging legislation that they say will help level the playing field and account for the realities of the online-radio landscape. They insist that if nothing is done to remedy the situation, digital radio is unlikely to grow as a business.

Since the IRFC announced its existence last week, members of the coalition say, there’s been a lot of misinformation floating around.

The sorts of changes the group mandates, for example, will not result in less revenue for artists, says Clear Channel EVP of Marketing and Communications Wendy Goldberg. Indeed, she argues, “There will be a bigger pie for everybody.”

She adds that the IRFC aims to provide more accurate and comprehensive information to the Copyright Royalty Board, which sets rates. The CRB is currently bound by outdated information, she points out, and a more informed CRB can only result in a wiser rate structure which will ultimately maximize the availability of music to the public and boost revenues industrywide.

The group’s name comes from the Internet Radio Fairness Act, which was introduced by Sen. Ron Wyden (D-OR) and a bipartisan, ideologically diverse group of congressional reps in September. The bill is the latest legislative attempt to balance the scales by recommending (but not establishing) a universal standard.

It’s not the first time elected reps have assessed the situation; legislators in the last Congress, the IRFC reminds us, deemed the current webcasting rate an unfair “performance tax.”

“This legislation is about giving the CRB more information; it has nothing to do with setting or changing royalty rates—period,” Goldberg points out. “The original standard was set up long before there was even general broadband usage—and because the CRB can't by law consider a broader spectrum of data that looks at the marketplace as it actually is today, it's having a negative impact on the growth of the Internet radio industry.”

“The goal is to give consumers more choices for listening to music; enable artists to earn increasingly more, not less. money as Internet radio grows; and drive higher revenues for the record labels themselves, because it will grow the pie for everyone,” she adds.