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Musicians challenge Pandora's proposal to reduce Internet radio royalty rates

What seems like the line-up for a Live Aid benefit concert is actually a letter signed by 125 singers opposing Pandora's attempts to cut artists' pay when music is played over Internet radio.

Recording stars including such notables as Jackson Browne, Colbie Caillat, Common, Cee Lo Green, Billy Joel, Journey, Maroon 5, Katy Perry, and Frankie Valli said in the letter that while they are "big fans of Pandora," they can't countenance the US online music company's lobbying to slash royalties paid to recording artists when their songs are played.

In a petition sponsored by SoundExchange and musicFIRST, and published in Billboard magazine, the signatories expressed support for Pandora's successful IPO and recent revenue growth. But the open letter also firmly criticises the company's tendency to call on the US government to "gut the royalties that thousands of musicians rely upon."

"That's not fair and that's not how partners work together," the letter states.

Congress has previously intervened in the ongoing struggle between artists and Internet radio companies. During the Copyright Royalty Board's (CRB) last rate-setting process, US legislators helped to negotiate a short-term solution that kept Internet radio companies from paying more than 100 per cent of their revenues in royalty fees. But that agreement is about to expire and Pandora founder Tim Westergren believes that the lower royalty rates should be a permanent fix.

"The Internet Radio Fairness Act (IRFA) is the right permanent solution. We look forward to partnering with all parties on building a sustainable and equitable future," Westergren said in a statement.

Congress is currently considering the IRFA, which if enacted would allow the CRB to evaluate Internet radio royalty rates under the widely used 801(b) standard, instead of the current standard, according to a Pandora spokeswoman.

While musicFIRST claimed that the bill passing could slash by 85 per cent royalties paid to musicians and artists when their songs are played over Internet, Westergren said passage of the IRFA would in fact "mean more jobs in a sustainable industry, more choices for listeners, and more opportunities and revenue for working artists and their record labels."

"When the digital music sector is allowed to grow and innovate, everybody wins," he added.

MusicFIRST executive director Ted Kalo begged to differ.

"We all want Internet radio to succeed but it won't if it tries to do so on the backs of hard working musicians and singers," he said.

Last week, Pandora filed a lawsuit against the American Society of Composers, Authors and Publishers (ASCAP) over what it considers exorbitantly high royalty rates. The suit asks the court to impose more "reasonable" fees for the right to stream songs governed by ASCAP, which represents 435,000 US composers, songwriters, lyricists, and music publishers.

In response, Michael Huppe, president of non-profit performance rights organisation SoundExchange, pointed to the deleterious effect lowering royalty rates would have on tens of thousands of recording artists who "rely on this digital performance revenue stream to make a living."

"It is important that we protect artists and the long-term value of their music, which is, after all, the foundation of Internet radio," Huppe said.