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9-25-2012
Last week, Utah Republican Congressman Jason Chaffetz (pictured) with Colorado Democrat Jared Polis introduced the "Internet Radio Fairness Act," which will change the way streaming royalties are calculated. It appears to be a victory, so far, for Pandora founder Tim Westergren who has been lobbying Congress to get his royalty rates lowered. The word "fairness" has been thrown around a lot and, during this election year, it seems to have gotten some traction. Yesterday we spoke to Chaffetz about his bill. Here is the audio and transciption of our chat.
Chaffetz said Internet radio is "barely hanging on" because it pays such a large proportion of revenue in royalties, and said the legislation will "level the playing field for Internet radio services by putting them under the same market-based standard used to establish rates for other digital services."
LISTEN TO OUR INTERVIEW HERE
RI: Can you first tell us why you decided to introduce this bill?
Chaffetz: Well, it seems as that there is a bit of disparity between what was happening with satellite radio, the internet. It didn?t seem like there should be such a disparity. For traditional radio, we?ve already put that to bed. We are not trying to make any adjustment there. We are trying to allow the internet radio portion of things to actually be a financially viable model.
RI: Do you have an idea of what you think that best model is moving forward?
Chaffetz: Yes. That?s why we introduced this piece of legislation. We did so in a bipartisan way and a bicameral way, in both the House and the Senate. We are just trying to create more parity between satellite radio, cable, and the internet. We think that would be a win-win for everybody. Artists would be able to make money. Radio stations would be able to make the transitions, so if they decide to have an internet presence they can also make that a financially viable model. Right now it is just way too expensive in terms of the royalty structures in order to make it work.
RI: Did you have a dollar amount in mind, or some kind of formula in mind that you could share with us?
Chaffetz: The standards that are already out there already work with these other models. We are not trying to reinvent the wheel. We?ve actually got something that has some miles on it. It?s been tried, true, and tested and that?s why we are just trying to shift that into our model.
RI: Some folks might say that Pandora knew what it was getting into before this came along and now they are trying to change the rules of the game. How do you address that?
Chaffetz: Well, it?s not just all about Pandora. We?ve got to remember that when this royalty structure was set up internet was just in its infancy. Nobody was really making a go of it. You can see how quickly the internet is spreading and expanding, and how consumers are demanding it. Back when it was drafted, that was the very infancy. We?ve learned a lot since then. We are trying to create a win-win, where everybody can make some money and make it a financial model.
RI: Now, the record industry had said that it is opposed to this. Do you see that group getting on board? How do you plan to get the to try to buy into this, if at all?
Chaffetz: Well, I think it?s really a win-win for artists. I think you will see as it moves forward that artists are thrilled about this and it would make a lot of sense for artists on all sides of the equation. I don?t think that will be an impediment right now. But that is certainly a viable question we have to answer as we do hearings and whatnot, but it?s not going to ultimately win the day.
RI: What are the next steps with this and how long do you think it will take before we see some action on it?
Chaffetz: Well, we just introduced it. Obviously, we have the big election coming up in November. But, after November, we will be back in the swing of things, getting ready for the next Congress. The next step is probably now have the hearing. I hope that it happens sooner rather than later, and some good viable discussion on the bill. These things always take time, like they are supposed to. But, the process has begun.
RI: Do you think there is enough support in both houses with enough members to get this approved?
Chaffetz. Oh, yeah. I think when?. As we have been sharing this with members of the judiciary committee and other committees, both sides of the house, not a real partisan issue?..this makes a lot of sense. All you can see is a lot of support. Ultimately, we will pass this piece of legislation. It?s a good one. People have been calling for it. We?ve been working on it for a number of months and it has good, bipartisan support.
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