Transfer Pricing Associates

Internet Radio Services Fighting for Fair Royalties

post Monday November 19, 2012

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Internet Radio Fairness Act was introduced in Congress to help establish a fair royalty rate standard for Internet radio. It is backed by Pandora, one of the largest Internet radio services aimed at ending the long-standing discrimination against Internet radio.The industry is facing a tough challenge sustaining the business model. According to, Internet radio services like Pandora pay about 50% of their revenues to record labels and artists, while satellite radio pays only about 10% and traditional AM/FM stations pay nothing.

The license fee of streaming digital music is set by a Copyright Royalty Board every five years instead of by the buyer and sellers themselves. Although the price should be set in principle based on what a “willing buyer and a willing seller” would do in an open market, since there is no consistent benchmark in the market, the judges set the Internet radio royalty rates at much higher levels compared to other form of radio services.

The introduced legislation would bring all digital music streaming services to the same “fair return” ground, make sure that the Internet radio stations can broadcast digital libraries of music without facing copyright lawsuits, and that the royalty judges are competent in making the most informed decisions.

Source:, Slash Gear

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