Monday, June 24, 2013

Music Royalty Rate Regulation Making a Mess of Things

There's a blizzard of news articles, op-eds, and commentaries webcasting service Pandora's acquisition of a radio broadcast station. The focus is on the impact of the purchase on Pandora's prospective payment of royalty fees to songwriters and composers.
This otherwise unusual purchase is explained by the compulsory licensed, rate-regulated context for music service. Pandora is hoping to gain a more favorable regulated royalty rate for itself by becoming a broadcaster.
Rate regulation regimes can be especially prone to manipulation, arbitrariness, or arbitrage. The problematic underpinnings of the current copyright law's forced-sharing and price-control approach as well as the need for long-term market-based reforms are things that I have touched on in an FSF Perspectives paper, "Putting Music Copyright Policy on a Free Market Footing," and in a blog post, "Unshackle Copyrighted Video and Music Content from Compulsory Licensing." It can be easy to get lost in the complexities of the current system of compulsory licensing and ratemaking system for music. But in sorting out the thicket, public policy should ultimately be aimed toward the restoration of a truly free market under the rule of law.