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Pandora is lobbying Congress to establish fair royalty rates

June 05, 2012|By Salvador Rodriguez | This post has been corrected. See note below.
  • Pandora has reportedly spent more than $50,000 during the first quarter alone on two lobbying firms to keep royalties for online radio low.
Pandora has reportedly spent more than $50,000 during the first quarter… (Pandora )

Pandora has reportedly spent more than $50,000 this year lobbying Congress to establish a more equal system for how much different forms of radio pay in royalties.

The online radio company has been focusing on Congress in preparation for upcoming meetings by the Copyright Royalty Board that will determine how much will be paid in royalties from 2016 to 2020.

As a result, Tim Westergren, Pandora's co-founder, is in Washington this week and will be testifying at a House subcommittee hearing Wednesday hoping to sway Congress to establish a system that will charge each form of radio a similar rate in royalties.

The way the system works now, newer forms of radio, such as online radio, pay more than older forms, like broadcast radio, which pays nothing.

"Now I am fully supportive of fair compensation for artists," Westergren said in his written testimony prepared for Wednesday's hearing. "But this lack of a level playing field is fundamentally unfair and indefensible."

Pandora paid more than 50% of its revenue to recording artists and labels last year because of royalties, Westergren's prepared testimony says. At the same time, satellite radio company Sirius/XM  paid only 7.5% of its revenue to recording artists while broadcast radio stations paid nothing to recording artists.

"It is time for Congress to level the playing field and to approach radio royalties in a technology neutral manner," he said. "America’s obligations to our performers should be shared proportionally by all who use their music."

As a result of the upcoming meetings, the Hill's report said, Pandora spent more than $50,000 during the first quarter alone on two lobbying firms.

This isn't the first time Pandora has fought the possibility of rising royalties.

In 2008, the company fought to keep the board from tripling royalties by rallying its users. Pandora sent emails to those on its customer list in a "Save Internet Radio" campaign that ultimately let to Congress stepping in to allow Pandora to negotiate a different royalty rate.

The different approach to the threat of raised royalties is symbolic of the changes the company has experienced since 2008.

Last summer, Pandora became a publicly traded company, and in November the company, founded in 2000, posted its first profit.

[For the record, 5:30 p.m. June 5: An earlier version of this post incorrectly said Pandora is lobbying Congress to keep the Copyright Royalty Board from raising its royalties. In actuality, Pandora is working to get Congress to establish a more equal system for how much each form of radio is charged in royalty rates.The post also included a quote from Westergren referencing issues from 2008 that was reported by the Hill as applying to the work Pandora is doing today. That has been removed.Also, in 2008 Pandora's grassroots campaign did not result in the Copyright Royalty Board reversing a decision but rather Congress stepping in and allowing Pandora to negotiate a different royalty rate.]

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