Data: the ultimate Internet music royalty

By Phil Johnson
IT World

The recently proposed Internet Radio Fairness Act (IRFA) has been leading many to take sides in a battle that continues to heat up. While it’s been easy to predict who would be on which side of the issue, one musician has offered a new and interesting perspective, and her take may not be what you expect.

First, though, some background information. 

I wrote about the IRFA in September, but here’s a quick recap: Internet radio stations, like Pandora, pay a significant amount of their revenue in royalties, most of it to recording artists and music labels (called performance royalties). In Pandora’s case, more than 50% of their revenue. Satellite radio (SiriusXM) also pays these royalties, but at a much lower rate (actually, a fixed percentage of their revenue), while terrestrial broadcasters don’t pay performance royalties at all. The IRFA is proposed legislation to reduce the royalties paid by Internet radio to be in line with what satellite radio pays.

Not surprisingly, Pandora backs it, claiming that the amount that Internet radio pays in royalties discourages innovation and entry into the market by other streamers and that the IRFA would “level the playing field” and, in the long run, help artists by encouraging new technologies and growth of the business. Also in favor of the bill are broadcasters like Clear Channel and Cox Media Group. These organizations, and others, have joined together to form the Internet Radio Fairness Coalition to push for passage of the IRFA.

On the other side of the aisle, opponents of the IRFA include songwriters and music publishers, Grover Norquist (WHEW! I’ve been waiting for him to weigh in), labels and, of course, musicians. In fact, opponents have formed their own coalition, musicFIRST, to oppose the bill, and support a competing piece of legislation, the Interim Fairness in Radio Starts Today Act (FIRST), which proposes to raise the royalties paid by satellite radio to match those paid by Internet radio.

None of this is all that surprising. What was surprising, though, was the analysis and opinion provided last week by Zoë Keating, a cellist, composer and recipient of the music royalties in question. Rather than just following the leads of Katy Perry, Megadeath and Pink Floyd by opposing the IRFA, Keating took some time to study the issue and her own situation and come to her own conclusions. She believes that royalties shouldn’t just be paid in money, but also in data.

 

After reviewing (and sharing with all of us) the payments that she gets from the various performance rights organizations (PROs), Keating notes that what’s missing from the reports she gets from the PROs is information. How many times was her music played? How many people heard it? Where is her music most popular? “How can I grow my business on this information?” she asks. 

 

Keating argues that by knowing who is listening to her music she can better market to them. 

 

“How do I reach them? Do they know I’m performing nearby next month? How can I tell them I have a new album coming out?”

 

As she points out, unlike broadcast radio, digital transmission should allow for the exact measurement of audience size. That information would be valuable to artists. In the end, while she’s happy to receive money, she writes that it’s “not as valuable as information. I’d rather be paid in data.”

 

Ultimately, she proposes a middle ground between the IRFA and FIRST: impose a single, equal royalty rate per listen, across all outlets, Internet/broadcast/satellite radio, one that’s lower than what Internet radio currently pays, but higher than what satellite radio pays. Most importantly, she wants data on the people that are listening to her music. 

 

“I want my data and in 2012 I see absolutely no reason why I shouldn’t own it,” she wrote.

 

I think she makes a cogent argument that could provide the key to a solution that will make everyone happy (or, perhaps, equally unhappy). It’s logical and fair enough that I think it’s worth consideration by all parties – which, of course, is why it probably won’t happen.

 

 

 

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