The legal-speak gets a little thick at times in this video, and it’s long, but there are very salient points made by both sides. I clearly agree with the artists/artist’s reps on this, and fervently oppose the passage of this legislation. On that score the things that resonate most with me are what Patricia Polach says about who benefits financially from the music artists create at 36:00, and what David Lowery says just before the end of the video about starting a “free Mercedes dealership,” then complaining to the government that he can’t make any money in an effort to force Mercedes to give him the cars at a lower price. (An argument I’ve made in various places using a failing bakery suing to get cheaper flour as an analogy).
From the other side, the point is made that there is a double-standard applied in music broadcast royalties that forces digital broadcasters to pay more than their terrestrial (AM/FM) counterparts. The answer as to why is very clearly explained. It’s not fair, it’s politics. It should be fixed. Just not in this way, and not with this bill.
It’s mentioned that the US is the ONLY country that doesn’t pay performers (meaning the people who played on the recordings, as opposed to just the songwriters and publishers) royalties from terrestrial radio play besides North Korea. Which is true. And is at the heart of the royalty discussion here, because digital outlets DO have to pay those performance royalties. (Keep in mind that terrestrial radio survives just fine everywhere else while still paying that higher royalty rate.)
Another excellent point is made regarding the need for more revenue-generating engines for artists to exist in the digital world as a legal alternative to theft. Something with which I totally agree. But the point that Lowery only has time to glance at the end is that businesses are supposed to succeed or fail based on the strength of their product. Pandora’s ACTUAL “product” is their music genome system. Unfortunately for them, in order for that product to be worth anything, it has to be married with recordings: Artist’s products for which they are due fair compensation. If Pandora’s “product” isn’t strong enough to attract enough users to afford their suppliers’ costs, then THEIR business isn’t viable. That does not mean the entire idea of internet-based radio isn’t viable. It means the space needs to be filled by a company/product that can strike the correct balance of supply cost versus income.
I highly doubt that Pandora (or Skype) going out of business will kill the idea of internet based radio. Nor do I believe that these two companies are the only two that will ever create viable internet broadcast income streams for artists. I do believe they show incredible hubris in going to the government to sort out what is essentially their business’s problem at the expense of a group (artists) who they obviously thought wouldn’t stand up for their rights after a decade of “free promotion model” thinking destroyed their livelihoods. And that’s the backdrop to this whole debate. It is harder to make a living as a music artist than it was before the digital music age, yet companies want to squeeze them even further in the pursuit of their ambitions. The question that needs to be asked even more often isn’t, “What happens if Pandora goes out of business,” it’s, “What if artists can’t afford to make music for Pandora to play?”
All that said…if you can get through the industry jargon there’s a lot to be learned from this debate.