Will New Music Royalty Rules Stifle Internet Radio?

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Source: Pandora

Source: Pandora

The outcome of a long-running dispute over song licensing fees that is being fought between two music industry heavyweights and Pandora may threaten the future of Internet radio as we know it. The American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), two of the biggest performance rights organizations, are currently asking the Department of Justice to make major changes to the longstanding consent decree rules that limit how much the organizations are allowed to charge for licensing song rights.

The current push to revise the consent decree rules follows last year’s court decision that found ASCAP and BMI could not selectively deny Pandora the rights to play certain works in its repertory, reports Billboard. That ruling essentially foiled an attempt by the performance rights organizations to force Pandora to pay a higher song licensing rate. As noted by Gigaom, under the current consent decree rules, Pandora pays a 1.85 percent royalty rate and terrestrial radio stations pay a 1.7 percent royalty rate. A subsequent court ruling that determined Pandora’s rate of 1.85 percent noted the apparent collusion between ASCAP and several music publishers as the groups were both trying to force Pandora to agree to higher royalty rates.

The consent decree rules were first established in 1941 to prevent ASCAP and BMI from having a monopoly on song licensing. However, the performance rights organizations argue that the rules need to be updated for the digital age. As a result, the Department of Justice recently asked the public for comments about whether the consent decree rules should be changed. ASCAP submitted its own comments about the consent decree revision in which it outlined its vision for how song licensing should be restructured “to better reflect how people listen to music today.” Unfortunately, the changes that ASCAP and BMI are proposing would not only wipe out Pandora, it would also likely end Internet radio as we know it.

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