Rates for Internet and satellite radio services are currently set according to different models. For
example, Sirius XM, a satellite provider, pays about 8 percent of its gross revenue in sound recording
royalties, while Pandora Internet radio pays about 50 percent of its revenue in royalties. Satellite radio
currently uses the Copyright Act standard for royalty payments while internet radio uses the “willing buyer/
willing seller” standard, in which the Copyright Royalty Board sets rates based on what a hypothetical
market rate would be. Two competing bills in Congress seek to close this gap.

The Internet Radio Fairness Act, H.R. 6480 and S. 3609, was recently introduced by Rep. Jason
Chaffetz, R-Utah, and Sen. Ron Wyden, D-Ore., and would use the Copyright Act standard for Internet
radio just as satellite radio does. On the other hand, the Interim Fairness in Radio Starts Today Act,
recently circulated by Rep. Jerrold Nadler, D-N.Y., would apply the willing buyer/willing seller standard to
satellite radio.

Congress should act on this important issue. However, Congress should consult young listeners before
making a very important decision on their behalf. As indicated in a recent CNN report, interviews
with college-age music fans suggest that more and more are choosing to stream music instead of
downloading it. The rise of music-streaming services like Pandora and Spotify gives consumers the
option to stream music online and are changing the way people consume music. Young people are at
the forefront of this change and should be consulted on these important issues that impact the future
of music. Without a reduction in statutory rates, it is not clear how long services like Pandora and
Spotify will continue to operate. Pandora has already thrown its support behind the Chaffetz bill and all
indications suggest that young people who utilize Pandora and/or Spotify will support the Chaffetz bill as
well.

Almuhtada Smith