Imagine this: You complain to your landlord that you pay him full rent, and yet, he refuses to fix the minor problem of your missing a toilet. It’s especially galling because the apartment above you has a toilet and doesn’t pay as much in rent. So your landlord replies “I can’t lower your rent. But I can raise your neighbor’s rent, and take his toilet. Sound good?”
This is pretty much how the music industry and Pandora are fighting over music royalties.
The problem is this: Pandora would like to pay the same royalty rate as radio stations satellite and terrestrial, which, really, if you think about it, makes sense on the face of it. The music industry, on the other hand…
At the center of this issue is the Internet Radio Fairness Act, [which] would sharply cut the royalties online radio services pay to studios and artists, making the fees more comparable to those paid by radio and satellite radio providers. The music industry has lined up against the bill and has supported a separate bill that would instead increase the rates radio and satellite companies pay to match Pandora.
It’s worth noting that lowering Pandora’s rates wouldn’t really screw the labels. The labels would do what they’ve always done, and screw the musicians: Some estimate that royalties for songs played would drop by up to 85%. Needless to say, royalties for the bill that takes radio stations to the cleaners would not rise appreciably. Of course, the musicians would take it on the chin anyway because terrestrial radio can’t really handle a royalty increase, financially. Boston, for example, can’t keep an oldies station or an alternative rock station on the air.
Musicians get robbed, labels are greedy, ah well, business as usual, then.