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Internet Radio Fairness Coalition Forms To Overhaul Net Radio Royalties

IRFCThe Internet Radio Fairness Coalition, which has been assembled by several Internet and broadcast radio services including Pandora, Clear Channel and many others, officially launched last week. The Coalition comes together with a mission of urging Congress to support legislation of the Internet Radio Fairness Act of 2012 (IRFA), which they believe will bring the royalty system for Internet radio into the 21st century.  

The Coalition believes that the IRFA will create a sustainable business model for the music industry, giving consumers “more choices and more products for listening to the music they live; enable artists to earn more money as Internet radio grows; create a marketplace that will attract entrepreneurs to invest in new, innovative ways to deliver music to the public; and drive higher revenues for record labels.”

"Our piecemeal legislation covering music royalty rates was enacted decades before we had the Internet or current technology,” said Ed Black, President & CEO, Computer & Communications Industry Association (CCIA).

The legislation (introduced on Sept. 21) calls for all digital music services to be judged by the same rate-setting standard, which the Coalition feels will put Internet radio under a standard that is balanced for “the promotion and creation of creative works” and one that “encourages the growth of robust and sustainable markets for these works.”

The current royalty system, overseen by the Copyright Royalty Board (CRB), splits digital music into two categories of Internet radio and satellite radio that each carry its own royalty rate-setting standard.

“We believe that market-based solutions are the way to go," said Bob Pittman, CEO of Clear Channel.  "But in the absence of these agreements, the CRB needs to have and consider more relevant information so they are better able to develop a rate structure that will lead to a healthy, sustainable Internet radio marketplace. This will enable artists to earn more and connect more with their fans, consumers to have more choices, and entrepreneurs to invent and invest in new services."

The Coalition believes that the standard for Internet radio is inappropriate and limited in the data that can be considered, and therefore substantially hinders the growth of Internet radio businesses and platforms, as well as hurts consumers, artists and entrepreneurs.   

“This is a clear case of an out-dated legal framework that stifles technology and consumer options,” said Lee Knife, Executive Director & General Counsel of the Digital Media Association (DiMA). "This bi-partisan solution will drive more innovation in the legal digital distribution of music.”

The IRFA would also:

  • Provide all forms of digital radio the same standard at rate-setting proceedings before the panel of judges on the Copyright Royalty Board;
  • Provide for Presidential nomination and Senate confirmation of CRB judges, and;
  • Promote a competitive marketplace by making it easier for artists and labels to negotiate directly with digital radio services and arrive at a negotiated rate outside the CRB process.

"Legislation that establishes a fair royalty rate setting-standard for Internet radio will drive investment in webcasting, which ultimately offers greater opportunities and more revenue for working artists," said Pandora Founder and Chief Strategy Officer, Tim Westergren. "Internet radio has been shown to help decrease music piracy and increase music sales. When the digital music sector is allowed to grow and innovate, everybody wins."

Founding members of the Coalition include:

  • 977 Music
  • AccuRadio
  • Clear Channel Media and Entertainment
  • Computer and Communications Industry Association (CCIA)
  • Consumer Electronics Association (CEA)
  • Digital Media Association (DiMA)
  • Digitally Imported
  • Engine Advocacy
  • National Religious Broadcasters Music License Committee
  • Pandora
  • Radio Paradise
  • Salem Communications
  • Small Webcaster Alliance (SWA)

To learn more, head to

Hisham Dahud is a Senior Analyst for Additionally, he is the head of Business Development for Fame House and an independent musician. Follow him on Twitter: @HishamDahud