Pandora Media, the Oakland, Calif.-based Internet radio company, is pushing Congress to pass the Internet Radio Fairness Act, reports Reuters. The act would help regulate and establish how artists get paid by Internet radio companies.
The problem, according to the 125 artists, is that the bill could reduce royalty payouts by 85 percent. MusicFIRST, a coalition which supports musicians seeking fair compensation, and SoundExchange, a nonprofit that collects digital royalties and disburses them to artists, have joined to petition against the Internet Radio Fairness Act, and 125 artists have joined in the fight. They include Rihanna, Billy Joel, Britney Spears, Common, Maroon 5, Missy Elliot, Sheryl Crow, Pink Floyd, Katy Perry, CeeLo Green and Beach Boys founder Brian Wilson.
In the letter, the artists state “we are big fans of Pandora” but question why Pandora would lobby Congress to change the royalty structure.
“Pandora is now enjoying phenomenal success as a Wall Street company," they write. "Skyrocketing growth in revenues and users. We celebrate that. At the same time, the music community is just now beginning to gain its footing in this new digital world. Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s not how partners work together.”
Pandora now holds a 7 percent share of the Internet radio market in the United States, nearly doubled since last year, notes Reuters. The current royalty system is not set to expire until 2015, so as Pandora becomes more successful it will have to pay out more royalties to artists.
In a statement in September, Pandora touted the Internet Radio Fairness Act as a way to equalize royalty payouts across all digital media platforms. More importantly, Pandora believes the current royalty setup is unfair to Internet radio stations. Pandora stated, "Royalty rates for different formats of digital radio are astonishingly unequal. Currently, Internet radio shoulders the largest royalty burden, far higher than any other form of radio. Last year, Pandora paid roughly 50 percent of its total revenue in royalties, more than six times the percentage paid by SiriusXM.”
In a blog post, Pandora's founder, Tim Westergren, said acts like Lil Wayne and Drake earn $3 million from Pandora, while other artists, including Coldplay, Adele and Wiz Khalifa earn $1 million. Ellie Goulding more than $600,000, and Mumford and Sons better than $500,000 from royalties. Pandora states it will pay over 2,000 artists $10,000 in royalties and nearly 800 artists will receive more than $50,000.