The Digital Music Debate Heads To Court

Players on both sides of the debate are gearing up for a key hearing next week in Washington that will help determine the digital royalty rates dictated by federal law.

One the one side, online radio service Pandora is asking the Copyright Royalty Board, a government body that controls what music labels can charge for streaming songs, to reduce the fees it pays to music labels — its biggest expense.

On the other, SoundExchange, a licensing group that represents the major music companies, is asking for a significant hike in recorded royalties.

The NY Post is reporting on Monday, a panel of three federal judges appointed by the Library of Congress will hear statements made by big-name digital radio players from Pandora to iHeart Radio and Liberty Media’s Sirius.

While a decision isn’t expected before the end of the year, industry insiders are already handicapping the odds of a rate hike.

“It isn’t a question of whether rates will go up but how much,” said one source close to the record labels. “Expect it to be at least a 40 percent increase.”

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