More signs of dinosaurs protecting their territory using the power of government.
A music industry group is asking XM Satellite Holdings Inc. and Sirius Satellite Radio Inc. to pay at least 10 percent of their revenues for the right to play songs over their networks.
Unlike land-based radio stations, which pay royalties only to songwriters and music publishers, federal law requires satellite radio, digital cable and Internet companies that broadcast music to pay the artists and record companies.
The two subscription satellite radio companies have been paying about 6.5 to 7 percent, analysts estimate, although the figures are not publicly disclosed. That agreement expires at the end of this year, and the Copyright Royalty Board, an arm of the Library of Congress, will determine the rates the companies pay for the next six years.
Why is there a federal law for satellite radio, digital cable, and Internet companies? Maybe there’s a valid reason for such a difference, but I can’t think of one that appeals to common sense. And why are rates decided by the government, rather than negotiated in the marketplace? It would make more sense to find the true market value of those rights than to have the government decide what they should be. Letting the market decide would allow companies to create new distribution and pricing models that might prove more beneficial to the music industry.
Besides could the market work faster than this?
The Copyright Royalty Board will hold hearings before it decides on new rates, a process that many say could take 18 months. Until then, XM and Sirius will continue to pay the current rates. If an increase is approved, they will be required to pay the difference retroactively.
Without regulation forcing capitalism out of the equation, no such structure would survive the pressures of competition.