Over one hundred artists signed an open letter to be published in this weekend’s Billboard Magazine, making it abundantly clear that they oppose Pandora’s stance on The Internet Radio Fairness Act, which would decrease the royalty rates paid by Internet radio companies. Signees include crowd favorites such as Katy Perry, Rihanna, Pink Floyd, Jimmy Buffett and Billy Joel. The artists grouped together to ask Pandora why they are begging Congress to step in and “gut the royalties that thousands of musicians rely upon” when they can just as easily work together as partners to continue bringing fans the great musical experience they rightly expect.
“This issue is critical to the tens of thousands of recording artists we represent — all of whom rely on this digital performance revenue stream to make a living,” SoundExchange President Michael Huppe said in a statement. “It is important that we protect artists and the long-term value of their music, which is, after all, the foundation of Internet radio.”
On the other side of the fence, Pandora’s founder Tim Westergren worries about the future profitability of the company. In a recent interview, Westergren points out that “on the growth side, it’s been a wonderful story.” However, on the profitability side, it’s much different. Nearly 50% of Pandora’s revenue goes to pay royalties, whereas other digital broadcasters such as Sirium XM fork over a mere 8%. Westergren urges Congress to set Pandora’s streaming rates at the same legal standard used for satellite broadcasting companies.
Although this is a dicey situation and each side of the table continues to struggle to make ends meet, the reality is that this industry continues to face diminishing margins. Since Internet radio is undoubtedly the way of the future and artists rely on those royalties to continue producing, both sides are bound to come together at some point to reach an agreement, especially if they have any hope in keeping this business moving forward.