Meet the Internet Radio Fairness Act, a law that could be a massive financial boon to Pandora

From The Next Web:

Pour yourself a cup of coffee, this is slightly complicated. Today, two Representatives, Chaffetz and Polis, introduced the Internet Radio Fairness Act in the House, the lower chamber of the US Congress. In a timed stroke, Senator Wyden put forth a similar bill in the Senate. Thus, we have three Congressional members with two bills for two houses.

The act is designed to lower the royalty rates that online radio providers pay, bringing their costs to deliver music to consumers in line with what cable and satellite radio stations pay. As it is widely known, terrestrial radio stations pay nothing to spin tunes. Thus, Internet radio providers pay the most, cable and satellite in the middle, and normal radio nothing.

If that seems unfair, that’s because it is. Thus, the Internet Radio Fairness Act. To put this into perspective, The Hill has a few figures on the cost of delivering music amongst the different methods:

According to statistics provided by [Rep.] Chaffetz’s office, Internet radio services pay more than 55 percent of their revenue in royalty fees, while cable and satellite stations pay between 7 and 16 percent.

Keep in mind that for the normal FM radio that you tune in to assuage your soul during your crushing commute, no money is going to those artists. The founder of Pandora, Tim Westergren, wrote a column for the Huffington Post earlier this year in which he detailed exactly how much his company shells out to artists:

Consider this: last year Pandora generated $274MM of gross revenue, and paid $136MM of performance royalties — approximately 50 percent of the total revenue. In the same year, SiriusXM, on revenues of $2.7B paid $205M in royalties, or 7.5 percent. Radio delivered over cable television pays 15 percent of revenue. Radio delivered over the FM/AM spectrum pays nothing to performers.

Continue reading the rest of the story on The Next Web