Senate hearings on music royalties

In the US, the Senate has been holding Judiciary Committee hearings on music royalties.

Is internet radio on track to be a $20 billion (that’s billion) advertising market, as claimed by John Simson of Soundexchange?

Or is internet radio a fledgling industry, likely to collapse under the burden of royalty payments imposed by the Copyright Review Board?

Pandora is the largest internet radio company with revenues of $25 million. $18 million of which will be paid in royalties to … Soundexchange.

A similar gulf exists between artists on whether royalty payments are their best chance of reward as we move from ‘from a culture of possessing music to one where music is not owned but merely listened to through various platforms.’

Or do the promotional effects of internet radio outweigh some loss of royalties, especially for small and developing artists who can now have a direct relationship with their audience?

These are the artists who gain exposure through small or multi-channel stations. Higher royalties will eliminate these stations according to the CEO of Pandora radio  who argues ‘if lower royalties are not agreed to, only broadcasters who can subsidize their operations through their broadcast operations would be left on the Internet.  Diversity would be lost.’ One musician suggests ‘such consolidation would be a “huge step back” for artists.’

‘Consolidation’ is another way of describing the concentration of capital. Only established media companies can cross-subsidise their internet operation. It is taken as a  given in US discussion that media companies will sell advertising across platforms: TV, radio, internet.

Much of the growth of internet radio, especially in the US, has been driven by listeners’ preference for small stations, which are free of advertising. That’s a threat to media companies who sell advertising on FM and satellite radio, who have been losing audience to the internet and looking increasingly irrelevant to young audiences.

So, we a faced with the likely loss of two kinds of space which we have enjoyed in recent years. One, the diversity of small essentially non-commercial radio stations or multi-channel stations (Pandora in the US, Last FM originating the UK). Two, advertising-free listening from the same stations.

Some of the best coverage on the CRB and royalty issues is by lawyer David Oxenford in his broadcast law blog. Read his full account of the Senate Hearing.