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The Best Take Yet on Pandora's Decision to Buy an FM Station

Stocks in this article: P SIRI

NEW YORK ( TheStreet) -- While I'm fascinated by the soap opera-like drama, I wish the childish back and forth between Pandora (P) and the music industrial complex would end.

I study each move closely so, with each day, I know the story better than the back of my hand. But, let's face it, I can't dig too much into the minutia of the legal posturing between Pandora and ASCAP or Pandora and BMI or the ins and outs of The Internet Radio Fairness Act or The Copyright Royalty Board for fear of putting my enormous (snark, snark) audience to sleep.

Plus, why should we ( me and you) have to concern ourselves with this inane fight? It's the type of pissing contest that deserves about as much attention as contract negotiations between a sports franchise and their superstar holdout. Sports fan just want to watch sports. And music fans just want to experience, see, listen to and interact with music and musicians.

That experience would be a heck of a lot richer if sanity would prevail throughout the music industry, Internet radio, broadcast radio and SiriusXM (SIRI) satellite radio.

Folks on both sides of the issue will call my one-size-fits-all solution to the royalty mess "too simple" or "not possible," but that's just another way of saying we do not have the will or we're too afraid of what real change might look like. Which is just code for we can't swallow our pride, set aside our egos and work together for the better of the industry at the expense of our perceived self-interest.

But that aside, what will all of these disparate lawsuits accomplish other than making an already confusing situation even more scattered and chaotic?

One thing is certain -- the system is busted.

In the best explanation we have seen yet for Why Internet Radio Royalties Led Pandora to Buy an FM Radio Station, Jodie Griffin of Public Knowledge first draws the distinction between the two types of royalties so many are obsessing over:

The real reason for Pandora's purchase of an FM radio station is Pandora's royalty rate for musical compositions on its internet radio service. Note: this is a separate legal issue from the licensing Pandora pays for its use of sound recordings. The underlying musical composition gets its own copyright, and must be licensed in addition to the sound recording rights.

It's important to point that out from time to time, the distinction between the two different types of royalties. Just like it's important to articulate the difference between the compulsory rate Pandora chooses to pay for the use of sound recordings vs. the direct licensing deals services such as Spotify go with.

I mean I was arguing with a guy the other day who actually publishes articles on this topic and it became clear he had no clue whatsoever as it pertains to these important nuances. A basic understanding of facts you really have to have before getting into the opinion business.

But what Griffin says from there about the Pandora FM radio purchase/publishing dispute applies across issues:

This is a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they're using. This makes no sense. The law should treat like uses alike. Regardless of how high or low you think performance royalty rates for webcasting should ultimately be, there is no logical reason to give preferential rates to certain companies just because they arrived at the negotiation table first.
... But most importantly, treating the same uses differently to give preference to older technologies and dominant companies will only ensure that upstarts and new competitors won't be able to successfully enter the market. This means that the incumbent companies will feel no pressure to become more responsive to listeners or to artists, because neither group will have any other alternative path to reach each other. As a result, individual musicians and music fans will continue to be little more than an afterthought among the dominant rights holders and distributors.

Man. If I wasn't married I would hit one knee and propose to Griffin over Skype. So very well-stated.

-- Written by Rocco Pendola in Santa Monica, Calif.

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