According to The Verge, peace talks are said to be in the offing between internet music distributor Pandora and musicians and labels. Pandora has been looking to cut its royalty payments, while music suppliers don’t particularly want a pay cut.
Pandora is looking at a royalty rate increase soon, taking the price up from 11/10s of a penny to 13/10s of a penny. It doesn’t sound like much, but it adds up into the millions of dollars, and Pandora says it eats up 60% of the company’s income.
Pandora is currently backing the Internet Radio Freedom Act, which would lower its rates to the same level paid by satellite and cable audio services.
Musicians don’t object to parity, but not if it means a pay cut for them. According to The Verge, they say it is not their fault that Pandora is not effectively monetizing its service. With a better business model, they suggest Pandora could turn that 60% figure into something closer to 25%.
Details on the talks are in short supply – they are said to be in the preliminary stage with more formal talks as yet unscheduled.
RBR-TVBR observation: One thing is for sure – Congress will absolutely love it if these warring factions can arrive at their own negotiated solution. As we’ve pointed out many times, legislators would much rather stay out of business v. business disputes, and even when they feel the need to intervene, getting anything all the way to the Oval Office for a presidential autograph is extremely difficult these days.
And the rainbow effect for broadcasters would likely be less noise about the entire royalty debate on Capitol Hill. Just the absence of hearings on rate disparity between companies like Pandora and companies like Sirius XM, which does not involve AM-FM at all, still causes AM-FM radio to get dragged into the debate.
So we wish Pandora and the music industry well and hope for a successful result from their negotiations.