Are Music Streaming Royalties Fair?

pandora

US Justice Department will investigate into music streaming royalties to see if those producing music for sites such as Pandora should be paid more

The US Justice Department is to look at streaming music royalties as music rights holders battle with internet radio and music streaming services.

Licensing groups ASCAP and BMI  have said that decrees from 1941 are now out of date as they don’t reflect the increasing popularity in streaming services.

“The Department understands that ASCAP, BMI and some other firms in the music industry believe that the consent decrees need to be modified to account for changes in how music is delivered to and experienced by listeners,” the department said in a statement.

Publishers are arguing that royalty rates for their members from music services such as Pandora need to be increased and these consent decrees interfere with bargaining for higher rates.

Who Owns The Internet Radio Market?

Pandora has around 70 per cent of the internet radio market in the US with about 77 million listeners actively using the service. It believes that the current decrees give a fair rate that protects songwriters, broadcasters and consumers.

“Any review of the consent decrees must take into account the careful balance of how to best serve songwriters while also fostering competition and innovation to the benefit of consumers,” said Pandora’s director of public affairs Dave Grimaldi.

Consent decrees governing royalties have bee amended in 1994 and 2001. This was before iTunes, Pandora, and Spotify existed.

“Since the ASCAP decree was last reviewed in 2001 — before even the iPod was introduced — new technologies have dramatically transformed the way people listen to music,” said Paul Williams, president and chairman of ASCAP.

“ASCAP members’ music is now enjoyed by more people, in more places, and on more devices than ever before. But the system for determining how songwriters and composers are compensated has not kept pace, making it increasingly difficult for music creators to earn a living.”

Giving The Music Makers The Royalties They Deserve

BMI chief executive Michael O’Neill chimed in and said his organisation “understands that the focus needs to be on the songwriters, composers and publishers responsible for the music we all enjoy, on the businesses using our music, and on serving the ever-growing public demand for music.”

The review comes after a succession of court cases over royalty rates. In 2012, Pandora sued ASCAP, seeking to lower the royalty rates it pays on streamed music. The judge in the case denied ASCAP’s request that the royalty rate increase over time and set the rate at 1.85 per cent of revenue from 2011 to 2015.

BMI in turn sued Pandora in 2013, requesting what they described as reasonable rates. Their request was denied but the case is still pending. –

The Justice Department is asking for comment from songwriters, composers, publishers, licensees and service providers until 6 August.

Do you think royalties from music streaming services should be increased? Tell us in the comments!

Rene Millman

Rene Millman is a writer and broadcaster. He first got into dance music when, as a hitchhiker on the M25 in the late eighties, he accidentally found himself at a rave in Wiltshire for three days. He's kept up with dance music ever since but has eased off the hitchhiking.

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