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NTU Opposes H.R. 6480, the Internet Radio Fairness Act.
An Open Letter to Congress:

November 26, 2012

Dear Member of Congress:

On behalf of the 362,000 members of the National Taxpayers Union (NTU), I write in opposition to H.R. 6480, the Internet Radio Fairness Act, which is sponsored by Reps. Jason Chaffetz and Jared Polis.

To be sure, Reps. Chaffetz and Polis are pursuing a worthy goal -- to level the playing field in an industry beset by overregulation and price fixing. However, this goal would be best achieved by removing the heavy hand of government from the equation entirely, rather than substituting one government-directed price-setting regime for another.

The current system of compulsory licenses requires musicians to allow radio stations to broadcast their songs at federally-regulated rates, which vary depending on the type of radio station. Traditional AM/FM radio stations pay nothing to labels and artists. Satellite radio stations like SiriusXM pay under a rate mechanism originally created in the 70s. Internet radio stations like Pandora pay according to the so-called “willing buyer, willing seller” standard, in which the government attempts to mimic the prices that would result in free market transactions.

The Internet Radio Fairness Act would move Internet radio stations to the satellite standard, thus lowering their payments to musicians and labels. This method may be initially appealing, but it falls short of comprehensively addressing inequities in the current system. While it would increase parity between Internet and satellite radio stations, it would also reinforce the federal government’s unwarranted role in royalty rate-setting. Further, it would result in Congress mandating advantages to some businesses over others.

Rather than re-shuffling the deck and having Washington continue to pick winners and losers, Congress should reject H.R. 6480 and end this capricious game altogether by doing away with federal price-fixing standards. Doing so would allow market forces -- and not the government -- to determine appropriate royalty payments. We would look forward to working with the sponsors of the H.R. 6480 as well as other concerned Members of Congress toward this desirable end.


Brandon Arnold
Vice President of Government Affairs