In late September, the bipartisan bicameral Internet Radio
Fairness Act (IRFA) was introduced
by Reps. Chaffetz, Issa, Lofgren, and Polis in the House, and Sen. Wyden in the
Senate. This bill would correct the current inequity in the way
performance royalty rates are calculated. Currently, services classified
as webcasters pay much higher fees than other digital radio services.
Last year Pandora
paid 54% of its revenues to royalties, while Sirius XM paid 8%. This
disparate treatment is based on what services were “pre-existing”
in 1998 when this regulation was created.
CCIA
supports the IRFA because it is consistent with long-held beliefs on balanced
Internet policy. Emerging online services should not be discriminated
against because of legislation that failed to anticipate future technological
development. Leveling the playing field to be “technologically neutral” will encourage more
innovation and competition, leading to more services entering this field with
newer business models, more choice for consumers, and more compensation for
artists. Availability of lawful, convenient, affordable (or free) digital
music reduces the appeal of online “piracy.”
In addition
to CCIA, a diverse group of stakeholders are supportive of this legislation,
from public services like Pandora, to small webcasters, to even the National
Association of Broadcasters (NAB). Traditional over-the-air radio
broadcasters are currently exempt from paying performance royalties, but they
will be subject to these high rates as they supplement their service with
online radio offerings, and they may be deterred from expanding their business
model due to the fees currently in place.
Congress
taking action to correct this is essential for the market and consumers.
