The Brookings Institution's John Villasenor, who's written extensively in support of a fairer standard for Internet radio royalties, calls satellite radio's royalty "too low by several percentage points."
Interestingly, Villasenor points to 801(b) itself at the root of the problem -- but it seems he blames the Copyright Royalty Board's interpretation of the standard more than the standard itself.
Villasenor may be familiar to RAIN readers (we've covered his writing several times here) for his calls for a change in the law that would have Internet radio royalties determined using the legal standard known as 801(b). This is the standard used to for satellite radio and cable radio royalties, as well as for the royalties recording labels pay composers and publishers to publish recordings.
[Currently, Internet radio royalties are determined using a different standard, known as "willing buyer / willing seller." Legislation known as the Internet Radio Fairness Act, now in both houses of Congress, would enact the standard change called for by Villasenor. More from RAIN on the IRFA is here.]
The 801(b) standard (among other criteria) requires the CRB to "minimize any disruptive impact on the structure of the industries involved and on generally prevailing industry practices."
The CRB decided the most appropriate rate for satellite radio for the 2013-2017 term would actually be 11% of gross revenue. But in its effort to minimize potential disruptive impact on SiriusXM, it decided to phase in the rate over the four years, beginning at 9% for 2013.
This is despite SiriusXM's 2009-2012 revenue growth, from less than $2.5 billion to over $3.4 billion.
Villasenor, who's also a UCLA electrical engineering professor, writes, "In fact, under the 9% rate that will apply for 2013, there’s a good argument that artists will suffer more disruption from their unfairly low income than SiriusXM will avoid thanks to its discounted payment obligations."
Read his article in Billboard here.