• Cloakroom Confidential: Pandora On Trial

    Insiders are watching closely the happenings over at the Copyright Royalty Board to see what will happen with the hearings on royalty rates. There is a great piece over at NewsMax that explains the situation very well.

    By the end of the year, the Copyright Royalty Board (CRB) at the Library of Congress will determine the new royalty rate streamers will have to pay record labels and artists each time a song is played or streamed.  The CRB has been charged under statute to “establish rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller.”

    An attempt by a federal agency to set rates that accurately mimic what a competitive marketplace would yield is no easy task, however the CRB has before it approximately 30 privately negotiated royalty agreements between streamers (willing buyers) and record labels (willing sellers). These voluntary, in-market deals provide a roadmap to determine what the market price of music should be.

    The bottom line is the decision from the CRB could affect millions of Americans who love streaming music on the device of their choice where and when they want because there is a concerted effort under way by the music companies to see set the royalty rate high enough to threaten the economic viability of streaming music companies. The recording industry has asked the CRB judges to not consider the only relevant market evidence it has before it, which unanimously points to a much lower rate than currently exists, and certainly much lower than the massive 80% hike the recording industry is asking for.

    The piece also discusses a new issue that has been raised “potentially creating a two-tiered system for artists to favoring major record labels over indie ones.” The author argues that this would “muddy already murky waters.”

    All I care about is if services like Pandora will exist after the Copyright Royalty Board renders a decision. I use the service everyday and would be scrambling for a lesser alternative if one day my Pandora app didn’t work and the company decided to go in a different direction.

    Neil W. McCabe

    Senior Editor

    A native of Massachusetts, Neil W. McCabe is the former editor of The Somerville News and The Alewife, both community newspapers in the Boston-area. For eight years, he was a reporter for The Pilot, Boston's Catholic newspaper, and a photographer for Cardinal Sean P. O'Malley's weblog. As an Army Reserve public affairs NCO, McCabe deployed to Iraq for 15 months as a combat historian and later served with XVIII Airborne Corps, Fort Bragg, North Carolina. After his active-duty service, McCabe joined Human Events, a Washington-based national political newspaper as a senior reporter and the editor of the Guns & Patriots newsletter. In addition to his editorial work at Daily Surge, McCabe is the Washington editor of Armed American Radio and the political director for Gravis Insights, the Florida-based pollster.

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