The IRFA: Good for Consumers, Artists and the Recording Industry
Today, there is no fair standard to determine how Internet radio should pay the recording industry. The current system was adopted many, many years ago and is out of date – and out of sync with the realities of the 21st century marketplace. It was put into place before there was a viable digital music business – and it shows. The Internet Radio Fairness Act (IRFA) brings the music royalty system into the 21st century by allowing the creation of a sustainable Internet radio business that will:
Give consumers more choices and more robust products for listening to the music they love;
Enable artists to earn increasingly more money as Internet radio grows and to better connect with their fans to market their music, merchandise and tours;
Create a sustainable digital marketplace that makes it possible for entrepreneurs to start new services and invest in new, innovative ways to deliver music to the public, and;
Drive higher revenues for the record labels themselves.
The IRFA will help artists make more money by accelerating growth and innovation in Internet radio. The more the sector grows, the more their music will be played, and the more opportunities they will have to reach their audiences, who are spending more time than ever looking for music online. The IRFA doesn’t set or change royalty rates for Internet radio. It simply says that the standards used in setting rates should support sustainable growth, and that the same standard should apply to satellite, radio, and cable.
Without a sustainable market, rates don’t matter. The revenue to artists is a function of rate times number of users. Both need to be considered to build a robust and sustainable market. The current rate structure actually deters volume on existing services — along with hindering the entry of new services into the marketplace. This prevents more music from being played to more listeners, which then prevents artists from making more money – and prevents record companies from making more money as well.
The discussion should be about implementing structures that can build sustainable and robust markets – and pay artists and record companies MORE money, not less.
The record labels and their allies don’t seem to understand how to help develop a sustainable market, and without that expertise they have defaulted to simply pushing for rates that cause possible new entrants to decide against entering the market and existing players to either drop out or reduce their volume. We know the record labels and their allies want the highest revenue they can get for themselves and their artists — but the fact remains that without a real, sustainable market they can’t achieve that goal.
The revenue the artists get is a result of the rate times the volume – so the record companies need to focus on the whole picture, and not just the rate itself. By allowing the Copyright Royalty Board (CRB) to consider more factors, we think we can all get closer to a structure that allows a sustainable market to develop with more robust players and new entrants.
This discussion should be about implementing structures that facilitate market growth. We’re actually in agreement with the record companies — we want them to make more money. And we think there is a win-win scenario where everyone wins. That’s what we are pushing for.