Pandora gives up on law to reform music royalty rates

Streaming site Pandora has quietly given up its campaign to get Congress to pass the Internet Radio Fairness Act, a law that would have put online radio services on a more equal footing with AM/FM and satellite stations when it comes to licensing song rights.

“We are pragmatic and recognize the low probability that Congress will address this issue in the near term,” Pandora CEO Tim Westergren said. The decision is being hailed as a victory by the music industry, which has waged a high profile campaign against the law, and where some have blamed streaming services like Pandora for a decline in their income. This view may not be fair, however, given that Pandora reportedly pays 70 percent of its revenue to obtain licenses from both songwriters and performers. By contrast, companies that deliver radio via satellite or cable services pay a lower rate under two separate licensing regimes, while traditional AM/FM radio stations must only pay the songwriters -- they don’t pay the performers at all.