SoundExchange President Weighs In On Internet Fairness Act
October 11, 2012

Earlier this week, Pandora co-founder Tim Westergren wrote a blog post pushing for the proposed Internet Fairness Act, which would lower royalty rates for the popular digital music service. Of course, Pandora pays out these royalties to SoundExchange, which then redistributes funds to artists. However, SoundExchange President Michael Huppe says Westergren's figures in his blog are misleading.

In an interview with Bloomberg, Huppe said that the current royalty structure has seen the Internet radio business grow rapidly, as SoundExchange is now collecting digital royalties from 1,800 outlets, compared to 1,210 in 2009. However, Hupp says, "We want Pandora to succeed. We want them to grow and have a hugely successful business but we donít believe artists should have to subsidize that business."

Huppe told Bloomberg that the payments listed in Westergren's blog are misleading and include other funds that donít go to big-name acts. "Weíre not just paying the Lady Gagas of the world, weíre also paying middle class artists who depend on this revenue stream," Huppe said.

While the current royalty agreement does not expire until 2015, and new negotiations for the next rate won't begin until early 2013, Huppe said such talks could be delayed while Pandora and SoundExchange lobby their cases in Washington. "Itís fair to say the negotiations have already begun by another means," Huppe said. "Clearly this bill is starting the process a little early and I expect this to continue into new term when Congress reconvenes." has also debunked Westergren's math in a column, as writer Glenn Peoples notes that the numbers in the Pandora blog are essentially twice what artists actually end up making, after royalties go through SoundExchange and half go to labels. You can read Peoples' analysis here.

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Jon Zellner
EVP/Programming Operations

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