NAB tries to block fee reduction for Web radio

Pandora founder Tim Westergren says traditional radio broadcasters are trying to kill legislation that could help reduce music royalty rates for Webcasters.

Greg Sandoval Former Staff writer
Greg Sandoval covers media and digital entertainment for CNET News. Based in New York, Sandoval is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at @sandoCNET.
Greg Sandoval
2 min read

UPDATE Friday, 3:25 p.m PT: To include Pandora's letter to fans

Time is running out on a bill that could pave the way for Pandora and other Webcasters to pay reduced royalty rates, as traditional radio broadcasters are now trying to kill the legislation.

"The NAB is trying to suffocate the first viable alternative to broadcast radio and is reaching out of their industry to kill another."
--Tim Westergren, Pandora founder

As Congress readies to adjourn, representatives of the National Association of Broadcasters are lobbying lawmakers to stop legislation that would allow anyone streaming music over the Web, such as National Public Radio and Pandora, to continue negotiating with SoundExchange, the body that collects statutory rates for the music industry.

SoundExchange and the Digital Media Association (DiMA), which represents Web radio stations, have been at odds over the fees required to stream music, but the two sides are "optimistic that a deal can be reached," said Tim Westergren, founder of music service Pandora. He has long said the music service won't survive unless royalties rates come down.

The bill, introduced late on Thursday, would allow negotiations between Web radio stations and the music industry to continue and reach a settlement while Congress is adjourned. The two sides need the government's OK before reaching a settlement because they're after a statutory license. Such a license gives Web radio stations the right to stream any copyright songs they want, but also requires them to pay a negotiated rate.

Without the legislation, the talks could come to a halt and the deal could fall through, Westergren said. The bill is scheduled to be voted on the House floor Friday. Congress is expected to adjourn no later than noon on Monday.

Westergren said the NAB's efforts to kill the bill is nothing more than an attempt to stifle the burgeoning Web radio sector, which many in terrestrial radio see as a competitor.

"This bill doesn't effect the NAB at all," Westergren said. "This bill is designed to give us the time to resolve what it looks we're close to getting resolved. The NAB is trying to suffocate the first viable alternative to broadcast radio and is reaching out of their industry to kill another."

Responding to Westergren's comments an NAB spokesman issued this statement: "NAB has concerns related to Congress attempting to fast-track a bill introduced less than 24 hours ago that could have serious implications for broadcasters, Webcasters, and consumers of music. NAB spent more than a year trying to work out an equitable agreement on webcasting rates, only to be stonewalled by SoundExchange and the record labels. We will continue to work with policymakers on a solution that is fair to all parties."

Westergren said that there is nothing in the Webcasting bill that would block traditional broadcasters from reaching their own rate agreement.

Friday afternoon, Westergren issued a letter to fans asking that they call their congressman to voice their support. He signed off: "Thanks for helping Pandora survive."