Pandora’s box not slammed shut yet
Internet radio broadcasters have won a battle in Congress to get extra time to negotiate royalty fees. It could mean troubled service Pandora may survive closure fears.
The House of Representatives has passed a bill that puts allows broadcasters to renegotiate royalty rates with the record industry; at the moment there’s a fixed rate mandated by Congress last year.
The bill passed unanimously, which surprises even supporters who’d expected a close struggle. The easy passage is largely because the National Association of Broadcasters (which represents over-the-air stations) has dropped its previous opposition to the bill after late discussions with politicians backing the proposals.
Given that the bill doesn’t directly affect traditional broadcasters, there was certainly some suspicion that the NAB’s initial lobbying against it was an attempt to stifle internet broadcasting.
The bill will likely go before the Senate tomorrow where it’s also expected to pass without trouble. The timing is particularly important as Congress adjourns tomorrow and won’t reconvene until after the upcoming elections. Without the bill passing, internet broadcasters will be stuck with the existing rates for some time.
CNet reports that lobbyists say public phone calls and e-mails supporting the bill helped, but that the backing of the non-profit National Public Radio group was an even bigger factor.
The issue first arose last year when the fees internet broadcasters had to pay almost doubled overnight to just under a fifth of a sense. That was a major financial blow for many firms, including Pandora which went from a lucrative model of paying just one-third of its revenues in royalties, to an apparently unsustainable model where royalties took 70% of the pot.
Of course, there’s no guarantee that broadcasters, record producers and officials will be able to negotiate a new deal before the February 15 deadline set-up by the bill. But if they’ve got any sense, the record industry will realise that it’s better to have a lower royalty rate than to drive broadcasters out of business and get no royalties at all.
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