The board set new rates for satellite radio Dec. 17 for 2013 at 9 percent of revenues, then with incremental increased up to 11 percent in 2017.
This is not a free market. It is an arbitrary work of a star chamber.
If there is one thing Americans resent about government intervention in the marketplace, it is when it picks winners and losers. What better example does one need that one music service provider pays 9 percent of revenues and another pays 50 percent—while, again, broadcast radio pays nothing.
Chaffetz said he is ready to fix it.
“A system that clearly favors some providers over others, picking winners in the music marketplace, is not good public policy. It’s time to level the playing field,” he said.
Writing for Slate.com, UCLA Prof. John Villasenor, said, “If you are like most of the millions of people who listen to Sirius XM satellite radio or Internet radio services like Pandora or Last.fm, you probably don’t give much thought to the underlying—and fundamentally flawed—framework that governs digital music broadcasting royalties.”
Villasenor, who is also a fellow at the Washington-based Brookings Institution, wrote a 27-page paper detailing the history of the disparities in how platforms pay royalties and his ideas for reform, but for him the nub is the ransom paid by Internet music services.
“But if royalty rates are too high, as has occurred with Internet radio, companies providing broadcasting services will continually struggle to turn a profit, impeding market—and ultimately royalty—growth,” he wrote.