Pandora has become one of the nation’s most popular internet radio stations. It has about one million listeners daily and 40,000 new customers a day. Pandora has made it to the top ten most popular applications for Apple’s iphone. Listeners can create their own stations according to their musical tastes. All of Pandora’s success, however, may soon reach an end with the increasing royalty rates.
    Royalty fees are paid to a single agent SoundExchange, Inc. The organization represents performers and record companies, and it supports the higher rates on the basis that musicians deserve a larger fraction of internet radio profits. “Our artists and copyright owners deserve to be fairly compensated for the blood and sweat that forms the core product of these businesses,” said Mike Huppe, general counsel for SoundExchange. The organization also believes that internet radio has not done enough to profit from streaming music.
    Some musicians defend Pandora and other internet radio stations on the other hand. Webcasters argue that internet radio offers a larger range of music than traditional radio and also promotes independent musicians. While traditional radio does not pay royalties and satellite radio pay 6-7% of their revenue, webcasters must pay per song and per listener. With the new royalty decision doubling the per performance rates, Pandora and other webcasters may go out of business. Tim Westergren, founder of Pandora, predicts that royalty fees will amount to $17 million this year, which is 70% of the projected revenue. “We’re funded by venture capital,” [Westergren] said, “They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like it’s headed toward a solution, we’re done.”
    This newspaper article is important for my paper because it portrays the trememdous effect the new royalties will have on Pandora. Westergren repeatedly states that the company will go out of business, and this is important for my paper. Performers will not be paid more for their work if there is no internet radio station that will be in business to pay them. In order to ensure a fair royalty rate, the company must not be threatened to close down. My paper defends another model for determining the royalties and argues against the latest copyright ruling on the royalty rates. This article is important because it not only demonstrates the copyright ruling from Pandora's point of view but also from SoundExchange's perspective.

     John Simson defended the new royalty rulings made by the Copyright Royalty Board in his testimony on "Music and Radio in the 21st Century: Assuring Fair Rates and Rules Across Platforms.” Simson is a former performer, artist manager, music attorney, and presently an executive director of SoundExchange. SoundExchange is the single receiving agent of royalties paid by webcasters. He supports the increasing rates on the basic principle that "the people who create music must be paid." He defends SoundExchange's concern over the business of webcasters but argues that revenues are predicted to increase over the future. SoundExchange currently represents about 31,000 artists and 3,500 labels. Simson emphasizes the hard work put into music creation, and he scorns at those who believe music should be free or those who devalue it. Simson argues that webcasters are contradicting the decisions by the Copyright Royalty Board solely based on their prospective financial gains. He strongly believes that the new rates are fair and that no further negotiations are required.
     Simson’s testimony is important to my paper because it explains the royalty decision from the opposing point of view. Simson directly works for the company receiving the royalties, and so he represents SoundExchange’s opinions. Although Simson argues that fair rates must be ensured for the sake of the musicians, SoundExchange is also benefitting from the increasing rates. This testimony is important to my paper in order to prove that SoundExchange is biased in its strong royalty support.