WASHINGTON, Oct. 25, 2012 /PRNewswire/ -- A wide spectrum of organizations, ranging from Internet radio services to broadcast radio companies and groups concerned about the future of the Internet radio industry, announced today the launch of the Internet Radio Fairness Coalition.
The Coalition's mission is to urge Congress to support legislation (The Internet Radio Fairness Act of 2012, or IRFA), aimed at bringing the royalty system for Internet radio into the 21 st century -- creating a sustainable business model for the industry that gives consumers more choices and more products for listening to the music they love; enables artists to earn more money as Internet radio grows; creates a marketplace that will attract entrepreneurs to invest in new, innovative ways to deliver music to the public; and drives higher revenues for record labels.
The IRFA calls for all digital music services to be judged by the same rate-setting standard, putting Internet radio under a standard that's balanced for the promotion and creation of creative works – one that encourages the growth of robust and sustainable markets for these works.
The current royalty rate-setting system for digital radio, including Internet radio, is the result of piecemeal legislation enacted as new technologies were invented. The result is a system significantly out of date – and, critically, out of sync with the realities of the 21 st century marketplace. This royalty system, overseen by the Copyright Royalty Board (CRB), splits digital music into two categories: Internet radio and satellite radio – each with its own royalty rate-setting standard. The standard for Internet radio is inappropriate and limited in the data that can be considered, and, as a result, substantially hinders the growth of Internet radio businesses and platforms and hurts consumers, artists and innovators.The bills, H.R.6480 and S.3609, were introduced by Reps. Jason Chaffetz (R-UT), Jared Polis (D-CO), Darrell Issa (R-CA), and Zoe Lofgren (D-CA) in the House and Sen. Ron Wyden (D-OR) in the Senate. "Our piecemeal legislation covering music royalty rates was enacted decades before we had the Internet or current technology. It's out of tune with the realities of the 21st Century marketplace. Updated rules would help deliver music to the public in devices of their choice and create a viable digital music business that benefits artists and innovators," said Ed Black, President & CEO, Computer & Communications Industry Association (CCIA). "Fixing the outrageous royalty discrimination against Internet radio will promote a healthy and vibrant Internet music marketplace. The result will be more investments, more new jobs, more money for musicians and copyright holders, and more choices for consumers," said Michael Petricone, senior vice president of government and regulatory affairs, Consumer Electronics Association (CEA). "We currently have a system that applies a unique rate-setting standard which forces Internet radio to shoulder a larger royalty burden than other forms of digital radio," said Lee Knife, Executive Director & General Counsel of the Digital Media Association (DiMA). "This is a clear case of an out-dated legal framework that stifles technology and consumer options. This bi-partisan solution will drive more innovation in the legal digital distribution of music. This will ultimately allow more choices for consumers and enable greater exposure for artists." "We believe that market-based solutions are the way to go," said Bob Pittman, CEO of Clear Channel. "But in the absence of these agreements, the CRB needs to have and consider more relevant information so they are better able to develop a rate structure that will lead to a healthy, sustainable Internet radio marketplace. This will enable artists to earn more and connect more with their fans, consumers to have more choices, and entrepreneurs to invent and invest in new services." "Legislation that establishes a fair royalty rate setting-standard for Internet radio will drive investment in webcasting, which ultimately offers greater opportunities and more revenue for working artists," said Pandora Founder and Chief Strategy Officer, Tim Westergren. "Internet radio has been shown to help decrease music piracy and increase music sales. When the digital music sector is allowed to grow and innovate, everybody wins." The legislation, which was introduced Sept. 21, would also:
- Provide all forms of digital radio the same standard at rate-setting proceedings before the panel of judges on the Copyright Royalty Board;
- Provide for Presidential nomination and Senate confirmation of CRB judges, and;
- Promote a competitive marketplace by making it easier for artists and labels to negotiate directly with digital radio services and arrive at a negotiated rate outside the CRB process.