Pandora has officially abandoned the Internet Radio Fairness Act – a piece of legislation that would have effectively reduced the royalty rates it pays to songwriters and publishers, as well as performers and labels. Pandora founder Tim Westergren attributed the strategic move to “the low probability that Congress will address this issue in the near term”, but strong resistance and bad press from initiatives like ASCAP’s #StandWithSongwriters petition and open letter signed by prominent artists opposing the bill was certainly a factor.
Pandora is most likely just redirecting its efforts to lower royalty rates to other means. The most immediate and obvious target is to lobby the Copyright Royalty Board (CRB) – the three-judge panel that sets statutory rates for webcasters. With different members on the CRB than Pandora’s last attempt, the company may like its odds better than passing a bill in Congress. Another possibility would be to seek direct deals with publishers and labels – a strategy that has already been adopted by Pandora’s largest competitor, iTunes Radio. Pandora seems to be lukewarm to this idea at best, as Co-Founder Tim Westergren told investors in September, “Direct deals are not something that we’re allergic to.”
Beats Music, the premium subscription music streaming service from Dr. Dre’s Beats Electronics, is set to launch in January 2014. Beats Music CEO Ian Rogers announced the launch and addressed the long-anticipated service’s delayed launch with a quote from Orson Welles, “It took Beethoven four years to write that symphony, some things can’t be rushed.” As debate around royalty rates for fellow music streaming services Spotify, Pandora and iTunes Radio continues, Beats Music’s royalty rates remain unknown. While they will likely be similar to Spotify’s, their purely subscription-based rather than freemium model could lead to more artist-friendly rates.