Why Did Pandora Sign Away Its Right To Petition The Copyright Royalty Board For Lower Rates?

from the well,-that's-obnoxious dept

It's already quite troubling that Pandora appears to be supporting the RIAA bailout tax against radios (Pandora's competitors), but now we have a better understanding of why, thanks to a little birdie who highlighted what's going on. Among the nasty little hidden gems in the recently agreed to webcaster settlement agreement (pdf) is that, if you want the lower rates in the settlement, you have to remove any objections to previous rate arbitrations and not participate in any future Royalty Board fights over royalties:
Article 6

Non-Participation In Further Proceedings
CPB and any Covered Entity making Web Site Transmissions in reliance on this Agreement shall not directly or indirectly participate as a party, amicus curiae or otherwise, or in any manner give evidence or otherwise support or assist, in any further proceedings to determine royalty rates and terms for digital audio transmission or the reproduction of Ephemeral Phonorecords under Section 112 or 114 of the Copyright Act for all or any part of the Term, including any appeal of the Final Determination of the Copyright Royalty Judges, published in the Federal Register at 72 FR 24084 (May 1, 2007), any proceedings on remand from such an appeal, or any other related proceedings, unless subpoenaed on petition of a third party (without any action by CPB or a Covered Entity to encourage such a petition) and ordered to testify in such proceeding.
Basically, this takes away the right of any company to fight for more reasonable royalty rates in the future -- which doesn't seem like it should be allowed. Based on this, there's basically no one left who can protest future rate increases -- which means that the RIAA/SoundExchange will easily be able to repeatedly push through greater rate increases.

Thus, since Pandora and the other webcasters won't be able to protest higher and higher rates, it needs to drag others into the fight to get help protesting constant massive rate increases: hence its support of the Performance Rights tax. In theory, if the NAB (who represents radio broadcasters) gets dragged into the fight, then there's a big dog who isn't subject to the draconian clause above, and can push back on the Copyright Royalty Board for lower performance rights taxes. Of course, that assumes that the NAB would fight for lower overall rates, rather than just focusing on rates for radio, and leaving the webcasters to fend for themselves...

No matter how you look at this, it's stunning that Pandora and other webcasters would sign away their right to state their own case in front of the CRB. RIAA/SoundExchange are laughing all the way to the bank. They get to make their case to increase royalty rates... while those who get stuck with the royalty rates have to shut up and take it. Regulatory capture at its finest. Again, we're left wondering why the Copyright Royalty Board even exists. Why are a group of old judges setting the price of music anyway?
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Filed Under: copyright, copyright royalty board, performance rights
Companies: pandora

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  1. identicon
    Zach, 15 Oct 2009 @ 4:48pm

    Here's a simplification:

    Pandora pays way too much. Traditional radio pays, comparatively, just about zip. Why? Beats the heck outta me.

    The way I see it, make everyone pay equal rates. Simple. Traditional radio is established. Theoretically, they can afford it - and if not, well, that's what happens when you play stuff nobody wants to listen to. Or reduce the rates on webcasters and everyone will be happy - except the RIAA, but come on, like anyone really cares about them.

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