Pandora's Tax

(not very clever, I know...)

The following is a letter I was inspired to write this morning after reading that Pandora is on the verge of shutting down. This is ridiculous. I would encourage you to read up on the situation, and if you agree, please send this letter to your own Senators and Representatives. I'll post a template in the comments that you can copy and paste. [EDIT: make sure you stick something in there about supporting the Internet Radio Equality Act, H.R. 2060 and S. 1353.]

Dear Rep. Cooper:

I am writing to voice my concern about the recent increase in royalty rates for internet radio broadcasters. As I understand it, the new rates are so high that many broadcasters will be forced to shut down before the first payment can even be made.

Let me say that I am not involved in internet broadcasting in any way. However, I am affected by this situation on many levels.

On a professional level, I am a musician about to release my first record. With the demise of internet broadcasting, that is one less outlet I can use to promote my music, which means my chances for success (and my bottom line) are significantly reduced. I am not a rich record company - I am paying for all of my expenses out of my own pocket, like a lot of independent musicians in Nashville. If I lose money, I don't have the option of "restructuring" or "downsizing" or squeezing money out of someone who is lower in the hierarchy. If I lose money, it's game over and my career is finished before it even had a chance to get started.

On a personal level, one of my favorite websites is about to fall victim to the rate increase. Pandora (http://www.pandora.com/) is a very unique website that is designed to introduce people to new music. It does what terrestrial radio used to do, and it does it better - because it can ask users what kind of music they already like, and make suggestions based on that.

I would recommend that you try this service out, Rep. Cooper. It's free and I guarantee you will be introduced to something new that you like. I have purchased a lot of music based on Pandora's recommendations.

Pandora can't be blamed for the problems the music industry is facing. They have always played by the "rules" that the copyright owners have imposed on them. Users are not allowed to listen on demand, and they can only skip past a limited number of songs per hour. And now Pandora, along with its extensive network of users, is being punished for their willingness to comply.

The new rates enacted by the Copyright Review Board at the request of SoundExchange would require Pandora to pay over 70% of their gross revenue in royalties - an amount of 2.91 cents per listener, per hour.

AT THE SAME TIME, satellite radio - which is not nearly as useful and on its way out as evidenced by the terms of the recent Sirius/XM merger - is only forced to pay 1.6 cents per listener, per hour. That is nearly an 82% increase from one type of radio to another.

I won't even go into the fact that these kinds of fees shouldn't exist. The CRB is essentially mandating that internet broadcasters pay mechanical royalties on top of the licensing fees that they already pay to the PRO's. It's sad that the music industry sees a need to cannibalize itself like this. Radio was a big part of my life growing up, as I'm sure it was for you, too, and if these changes are allowed to stand it will all but die out completely. And then where am I supposed to turn to for new music? 30-second preview clips on iTunes? I don't find that acceptable.

A good solution to this mess would be to move the burden from the broadcasters to the user - not something I would normally support, but hear me out. A small tax on internet service - no more than fifty cents to a dollar per month - would generate a lot of revenue for copyright owners in the music, film, and print industries. Allow the people to do what they want, listen to, watch, read, and download what they want - and allow them to pay for the right to do so. Negotiate with the companies involved to determine how to pay out the revenues, and in turn stop harassing the content providers that are trying to give us valuable services.

I'm afraid I waited too long to write you about this. It may be too late to stop anything from happening, but I want to make sure that you know that I am very concerned about this type of behavior from a government agency (the Copyright Review Board) acting in the best interest of a select group of greedy corporations - who, in fact, don't even know what's best for themselves.

Please take the time to investigate this matter and join together with other Representatives and Senators in Congress to fight against this injustice. It would cost a lot less in time and money than the proposed bailout of Fannie Mae and Freddie Mac, and you would be helping out countless small business owners who have been more prudent and responsible than those two companies have been.

Thank you for your time. I hope you are able to find a way to address this problem.

Sincerely,
Brandon de la Cruz

cc: Sen. Alexander, Sen. Corker

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