Big Tech and Big Media have joined forces in the "Internet Radio Fairness Coalition" which includes Clear Channel Media and Entertainment, Computer and Communications Industry Association (Google), Consumer Electronics Association (Google), Digital Media Association (Google) and... Pandora.
So you see, it sure looks like the way this works is the coalition paraded Pandora founder Tim Westergren first with the long face and the sad eyes and a narrative about how Pandora was having such a hard time and that artists and fans just had to support Internet radio and his $1 million a month or so in stock sales from his company with (what was then) a $2 billion valuation. Oh, no sorry -- just support Internet radio because Tim used to be in a band. They don't talk about the $1 million a month part. And once Tim got the narrative going about his days in a band, suddenly objects in the rear view mirror were smaller than they appear, and guess who jumps out from behind the curtain?
The Great and Powerful Oz -- Google and Clear Channel.
And so much for Pandora's commitment to independent artists -- Did Clear Channel ever make good on their indie radio promise out of the last payola investigation? And what's the implied threat if you disagree with them? Same one it always is with Big Media -- if you get in the way, you won't get played.
So let's be clear -- it's not about "Internet Radio", the Internet or Fairness. It's about money, power and lobbying, although I guess you could say it's an act. The IRFA is not just about the rates paid to artists -- if that's all it were about, then there would be no need for the court-packing and chilling effects in the bill. What court-packing and chilling effects, you say? You'd never know that stuff was in the bill if you just listened to Tim Westergren or read the pro-IRFA press releases.
The Tide Has Risen and Pandora is Throwing You Overboard
Here's five reasons why artists should be very concerned about the "Internet Radio Fairness Act":
1. "Reverse Payola" to Monopolies for "Music Discovery": The Internet Radio Fairness Coalition is backed by some of the biggest monopolies in the world: Google and Clear Channel -- it's Big Tech and Big Media combined. Is it reverse payola? If you make us pay you more money, we won't play your records?
Remember all the good things Clear Channel was supposed to do after they got slammed for payola in 2007? What did they actually do? Clear Channel tried to get artists to make direct deals with them. Direct deals where the independent artists waived both their songwriter's performance royalties and their artist royalty collected by SoundExchange.
[Following Clear Channel's 2007 settlement of a payola investigation with the FCC, Clear Channel (and other broadcasters) agreed to air 4,200 hours of indie music. The Future of Music Coalition commented at the time:]
Clear Channel is giving indie artists a raw deal by forcing them to give up performance royalties as a condition of getting airplay on its hundreds of stations. Remember, as a condition of its settlement with the FCC over payola allegations, Clear Channel and other broadcasters were required to play 4,200 hours of local and indie music. It's replacing one form of a payola with another.
Sneaky. Greedy. Egregious. Any number of pejoratives could be used to describe the move, but it is especially troubling because digital performance royalties are becoming an ever more important source of revenue for artists as technological changes drive the way music is delivered... This is a company that is not -- and has never been -- on the side of artists.
[According to FOMC's former executive director,] "'The fact that Clear Channel would require artists to waive royalties to get consideration for airplay clearly shows they've learned little from the payola scandal of the last couple years,' said Jenny Toomey, executive director of the Future of Music Coalition. 'Clear Channel is playing the same old tune.'"
Sound familiar? It will.
2. IRFA is Censorship Hiding Behind Fairness: IRFA allows monopolists like Clear Channel, Google and Sirius to threaten any artist organization with an antitrust lawsuit if the artists "impede" Big Media's lust for direct licensing.
Yes -- you read that right. Monopolists threatening an antitrust lawsuit against artists who organize. Go straight to jail, do not pass go, do not collect your $200. Using this government mandated gag rule, Clear Channel could have tried to silence that statement about them from the Future of Music Coalition's Jenny Toomey. Coalition, get it? Or the Recording Artist Coalition, or any one of a number of artist advocacy groups.
What Clear Channel and Sirius really want is artist-by-artist direct deals to pick off artists one-by-one. Google has already demonstrated a desire for the same treatment with the Authors Guild.
Google attorney Daralyn Durie told Judge Denny Chin [the presiding judge in the Google Books case] in federal court in Manhattan that [millions of] authors and photographers would be better off fending for themselves because their circumstances varied widely, especially since the copyright issue for authors involves the display of small snippets of text. (emphasis mine)
Did Tim Westergren tell you about this part? Does the "Internet Radio Fairness Coalition"?
Nope. Read the bill, it's right there under Section 5(a): "Limitation of antitrust exemptions".
And if there's no intent to chill artists, then why doesn't Tim Westergren say so since he so identifies with being in a band?
3. Pandora Wants to Legislate Profits on the Backs of Artists: Now that Pandora has a $2 billion or so market cap, the simple truth is that Pandora is trying to legislate its profits on the backs of artists and so does Google and Sirius XM -- a company that has $1.5 billion in cash on their balance sheet. This is just about money, it's not about music.
But for musicians, the salary remains the same.
4. Look Musicians in the Eye and Explain Trickle Down Innovation: Musicians gave Pandora and Sirius a discount on royalties in 2009 -- and helped save their businesses. Pandora and Sirius have billion dollar valuations today and their top executives -- including Tim Westergren -- are millionaires. Obviously, Google and Clear Channel also have multibillion dollar valuations.
So now these companies have joined together to tell artists, musicians and vocalists that a rising tide carries all boats and that the benefits from making Big Tech and Big Media richer still will trickle down to creators.
The tide has already risen. Not only has it not carried all the boats, creators are getting thrown overboard.
5. Payback is a Bear: IFRA Guts the Copyright Royalty Judges: Big Tech and Big Media want the Congress to get rid of the Copyright Royalty Judges who set the rates for Internet radio. That's right -- they want the Congress to fire the current judges and replace them with political appointees. Read the bill -- Section 6 "Proceedings of the Copyright Royalty Judges and judicial review".
This is simply payback for the current judges having the temerity to refuse to bow to the money. It's called "court packing". Get rid of judges you don't like and replace them with judges you can control.
Not only that -- notice the other part of that titles: "and judicial review". Big Tech even wants to control what previous rulings the new judges can take into account as precedent in later rulings. That means their judges start with a clean slate and can do whatever they like. He who doesn't like history drools over erasing it.
Tim Westergren isn't talking about this either.
And by the way -- don't let them tell you that somehow the judges are in the pocket of "Hollywood" (whoever that is) -- all the current rates were highly negotiated by some of the very people who are complaining of them now.
Remember, Westergren declared "the royalty crisis is over!" in July of 2009. Barely three years later they're back?
And now they want scorched earth.
The tide has risen and artists need to keep their heads above water. If Google, Clear Channel and Pandora haven't made that an antitrust violation.