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Billy Joel, Rihanna Fight Pandora Over Royalties

Artists oppose its efforts to change a compensation law


PandoraArtists as famous as Missy Elliot, Rihanna and Billy Joel are working against Internet-radio firm Pandora (NYSE:P) in its efforts to get the Internet Radio Fairness Act (IRFA) passed.

At issue is the system by which artists are compensated when their songs are played on Internet radio. Currently, Internet radio providers pay a higher royalty rate per song than do other media, such as broadcast and satellite radio.

While Pandora does receive income from subscriptions, it’s revenues are mostly advertising-driven. It claims that it now provides music to almost 7% of the U.S. radio audience.

More than 125 artists are preparing to publish an open letter opposing the bill, claiming that the new law would lower their income from Internet radio by as much as 85%. The letter will be published in music industry magazine Billboard.

The current royalty rate for Internet radio is set by law and locked in until 2015. The IRFA is sponsored by Representatives Jason Chaffetz (R-Utah) and Jared Polis (D-Colo.), as well as Senator Ron Wyden (D-Ore.).

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