David Lowery’s Panel at Future of Music Policy Conference Brings Out the Spinners

By the way, the first question to the panel from the floor comes from Pandora’s lobbyist Elizabeth W. Frazee, top spinner from Washington shillery Twin Logic Strategies–who also spins for the Computer & Communications Industry Association, the Consumer Electronics Association, Net Coalition, Yahoo!–all of which MTP readers will recognize.  (Nearly $1.5 million in lobbying money so far this year.)  Ms. Frazee’s revolving door profile is interesting as well.

Kudos to fellow spinner Michael Petricone from the trade bot Consumer Electronics Association in the role of “Never Seen Her Before” who is competing with Kurt Hansen’s cat for the nomination for “Best Feigned Surprise at Shillery Gibberish”!

A couple of questions seem to keep coming up that spreads disinformation about the rate side of the so-called “Internet Radio Fairness Act”:

1.  The “labels” won’t negotiate with Pandora prior to a Copyright Royalty Board hearing:

False Assumption #1:  First, it’s not “the labels” that negotiate—SoundExchange negotiates on behalf of featured artists, unions, indie and major labels.

SoundExchange is comprised of equal board members representing 50% artists and 50% indie labels and major labels.

False Assumption #2:   If you heard this question, you would probably think that Pandora tried to negotiate with SoundExchange in advance of the IRFA, but were rejected.  This is false.  Pandora never tried to negotiate with SoundExchange.  In prior years, there were always negotiation discussions in advance of the Copyright Royalty Board hearing.  In fact, it is safe to say that SoundExchange would entertain a proposal from Pandora at any time, even now.

2.  Congress “had” to overrule the CRB with the Webcaster Settlement Acts because the willing buyer standard is flawed:  This is also false.  The Webcaster Settlement Acts did not “overrule” the Copyright Royalty Board, the WSA actually gave SoundExchange the flexibility to negotiate customized royalty rates for different webcasters and simulcasters with the CRB rates as a fall back. The WSA allowed SoundExchange to discount the royalty rate established by the CRB not because the CRB is flawed, but because it was good business sense to add flexibility to the statutory rate system.

The rates given effect by the Webcaster Settlement Acts not only covered the past, but also established prospective rates going out to 2015.  In fact, Pandora’s Tim Westergren announced that “The Royalty Crisis Is Over!” in his July 2009 blog post.  This process resulted in SoundExchange taking much less than it was entitled to and helped Pandora go public.

David Oxenford (the lawyer for the webcasters in the negotiation) wrote:

In sum, while far from a perfect deal that webcasters would have selected on their own [yes, life really is a bitch you know], this deal does provide another option for webcasters with substantial advantages in many area to those that qualify for treatment under this deal. While no doubt the fight will continue over the standards that should be used to determine royalties in future proceedings, so that parties don’t need to enter into these after-the-fact settlements [which is not happening now because the 2009 deal is in place until 2015] when one party has a substantial bargaining advantage with a favorable decision already in hand, SoundExchange [including the artist unions] should be credited for agreeing to reach this deal when there was no compulsion that they do so. This deal presents certainty for many webcasters – eliminating further litigation and negotiation costs while setting rates at which a class of webcasters can go on with their operations.

Westergren and Oxenford could both have easily raised the cry that the CRB was broken but they didn’t.

They both applauded the result.