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Newberry: Royalty Rate Process Is ‘Royal Mess’

Pandora's Westergren says it's time to level the playing field

The current system for setting royalty rates is a “royal” mess, actually discouraging broadcasters from streaming, and all who stream music would welcome an opportunity to remedy the process.

That’s what Commonwealth Broadcasting President/CEO Steve Newberry told lawmakers here on Capitol Hill today during a hearing on the future of audio. The hearing was organized by Rep. Greg Walden, R-Ore., who chairs the Subcommittee on Communications and Technology and scheduled the hearing.

Testifying on behalf of the NAB, Newberry said the broadcast trade organization would be pleased to discuss reform of what he called a dysfunctional process.

The standard and procedures used to set streaming royalty rates actually hinder stations’ ability to innovate in the digital arena and should be changed, he said.

Pandora Founder Tim Westergren agreed, but he wants Congress to treat all forms of audio the same when it comes to setting royalty rates. Last year, on revenues of $274 million, Pandora paid $137 million, or 50% in performance fees to artists or labels.

As each new form of audio was invented, copyright law was changed, and the end result is that new media is penalized and old media is advantaged when it comes to setting rules for music royalties, said Westergren. “It’s time to level the playing field.”

Several lawmakers on the subcommittee asked witnesses what they thought of the new deal between Clear Channel and the Big Machine Label Group we reported on yesterday. Newberry called the deal “a free market transaction” that did not involve government intervention.

Newberry Prepared Remarks: ‘Nothing about this deal changes our strong opposition to a congressionally-mandated performance tax’

Westergren Remarks: ‘Approach radio royalties in a technology neutral manner’