Record Industry Bullies Pandora in Shakedown of Broadcast Radio

Record Industry Bullies Pandora in Shakedown of Broadcast Radio

American youth seem to perpetually be giving the world new words.  One such word is “pwn.” Wikipedia defines pwn as a “slang term derived from the verb own, as meaning to appropriate or to conquer to gain ownership. The term implies domination or humiliation of a rival.”  Pwn seems to describe exactly what the Recording Industry Artists of America (RIAA) is attempting to do to Pandora.

Pandora has been a supporter of the Internet Radio Fairness Act (IRFA), a bill to restructure royalties paid by Internet radio stations. Royalty rates for Internet radio currently set by the Copyright Royalties Board (CRB) in the Library of Congress seem to bear no relationship to real market forces. The IRFA is intended to encourage record labels to engage in free market negotiations with Internet radio stations by requiring the CRB to take into consideration market conditions and impacts. The idea is that the application of common sense at the CRB would inhibit unreasonable rate setting and make free market negotiations more appealing to record labels. 

RIAA, of course, vehemently opposed IFRA and played hard to protect their government inflated royalty rates. They trotted out artists from Pink Floyd to Cee Lo Green and relentlessly attacked IRFA and Pandora for pushing it. As far as Pandora goes, the RIAA won. Pandora recently announced that they are abandoning their pursuit of IRFA, choosing instead to focus their efforts on “other paths” to solve the problem of stratospheric and anti-competitive royalty rates.

But that’s not the end of the story. The same RIAA that seemingly just used its might to pound Pandora into submission is attempting to recruit Pandora’s support for an effort that would give the record industry even more power.

RIAA has worked with Rep. Mel Watt (D-NC) to introduce legislation slyly named the “Free Market Royalties Act” that would extend their royalty regime to broadcast radio and require payment to artists for airplay of their songs.

The Watt bill would upend a generations old social compact where radio stations get to play artists’ music and artists in turn become rich selling records off of the exposure radio stations give them. Worse yet, the bill is a major record label power grab. It would grant the SoundExchange, a non-profit run by the recording industry monopoly power to set royalty rates for all music and be the sole agency for collecting and distributing royalties to artists. RIAA wants Pandora’s help to pass this bill.

The copyright system in the US is schizophrenic and filled with powerful warlords who have gamed the system to protect their own fiefdoms. Among the strongest of these is the recording industry. Of all companies in America, Pandora should be the most aware of this fact. Pandora supporting any proposal that grants even more power to the RIAA would be a Neville Chamberlin-style appeasement at its worst. Or as today’s youth would say, Pandora will be getting pwned.