Beats Music and iTunes Radio, as well as other music streaming services, might take a hit from revised rules and regulations for music royalty rates. The U.S. Department of Justice is deciding whether or not to rewrite the music royalty laws that have remained unchanged since the World War II era.
The current restrictions were put in place during a time when the U.S. government was trying to rein in monopolistic practices. Since 1941, the music industry has been required to license songs at certain set prices to anyone who wants perform them or rebroadcast them. Though the two performance rights groups that represented and still represent the music industry–the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI)–chomped at the bit, the restrictions greatly benefited all involved, allowing broadcasters and performers to easily obtain song rights and providing an efficient way for songwriters and producers to collect royalties.
Now, in 2014, the ASCAP and BMI are pushing for limited restrictions that would allow more wiggle room in setting prices for music rights. This flexibility, while it would mean more money for songwriters, would also put a chokehold on Pandora and other internet radio services. What the ASCAP and BMI are hoping to do is to let licensed music publishers exclude digital song rights. The problem, however, is that this suggestion is exactly what a federal court judge said the music industry can’t do in a December ruling. Since the federal courts have denied the wishes of the ASCAP and BMI, the organizations is turning to the DOJ.
It is understandable that the music industry wants to solve the problem that digital music services are presenting. These services are often accused of keeping fat pocketbooks without paying musicians their proper dues. While it is true that streaming services are hard on musicians’ wallets, internet music companies actually already pay the 1.85 percent rate arranged under the as yet unchanged industry regulations. Terrestrial stations, on the other hand, pay at a 1.7 percent rate. Further, services like iTunes Radio and Pandora have to pay for “sound recording rights,” whereas terrestrial radio stations do not.
iTunes Radio was launched last year in an attempt to move in on the streaming services trend. Like Pandora, the service offers randomized tracks based on a user’s music preferences. With on-demand subscription services rising to popularity, like Spotify, Apple made a move to acquire Beats and its music service. Despite these decisions, Apple’s music services still remain behind Pandora and Spotify as far as user adoption.
Source: AppleInsider, GigaOm