I can’t remember the last time I bought an actual music CD. In fact, I can’t remember the last time I bought a song on iTunes. Like most young adults, I listen (legally) to music through Internet radio or via the cloud.
While most Internet music platforms, like Pandora and Spotify, offer users music for free, the services still have to pay royalties to the copyright holders. The royalty rates that the services have to pay are set by a panel of three copyright judges and are based on the “marketplace” rate for musical license.
Under this scheme, music webcasters pay a higher royalty rate than other digital music broadcasters. “Last year,” says Pandora’s Chief Strategy Officer Tim Westergren, “ Pandora paid roughly 50 percent of its total revenue in royalties, more than six times the percentage paid by SiriusXM.”