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EDITORIAL: Silencing Internet radio

The recording industry uses crony government to limit competition

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Washington, D.C., is a coin-operated world where lobbyists insert their nickels and politicians sing their song. Nobody is more in tune with the game than the music industry.

After generations of campaign contributions, backstage passes to concerts, staff tours of Nashville and Miami, music celebrity visits to congressional offices and the distribution of records by the Singing Senators (singing off-key), the music industry and its corporate lobbying arm, the Recording Industry Association of America, have been taking care of business, purchasing vast influence on Congress. This was not money for nothing.

The recording industry's power and influence has been on full display opposing the Internet Radio Fairness Act, legislation introduced late last year by Sen. Ron Wyden, Oregon Democrat, and Rep. Jason Chaffetz, Utah Republican, aimed at ending price discrimination against Internet music providers. By bringing attention to the current unfair and unbalanced royalty structure, Mr. Wyden and company are raging against the machine.

The Copyright Royalty Board, part of the Library of Congress, sets prices for music royalties. Recording industry lawyers are masters of manipulating the process and have fixed it so that Internet radio services such as Pandora and Slacker pay six times as much for use of music than competing services, such as cable and satellite radio. Listeners who get no satisfaction from tuning in to the same old thing on their car radio have turned to online services that offer a music lineup personalized to the listener's tastes. The government-imposed price disparity limits this alternative's ability to grow.

In November, the recording industry lined up more than 100 top musicians, including multimillionaires Rihanna, Cee Lo Green and the Pointer Sisters, to cry about how they'll lose money if Congress gets involved. Liberal groups such as the NAACP have also teamed up with some conservative organizations to preserve the status quo. "It is imperative that Congress protect intellectual-property rights and allow the free market to work in pricing negotiations," writes Thomas Schatz, president of Citizens Against Government Waste.

As long as the government sets prices, there can be no free-market negotiations. The current royalty levels are meant to doom Internet radio services. So far, 150 million people have registered for Pandora. As revenue comes in, it all goes out in royalties. Over time, this is a song sheet to bankruptcy.

That's exactly what the recording industry wants. The problem is not the marketplace. The problem is government price-fixing, picking winners and losers. Consumers should decide who wins; the winner should not be chosen based on who has the best lobbyist.

Fortunately, Rep. Bob Goodlatte, Virginia Republican, announced last week he would seek a comprehensive review of copyright law in the House Judiciary Committee, which he chairs. This will give lawmakers a chance to reconsider the current crony capitalist arrangement for music royalties.

The Washington Times

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