Daniel Webster noted that, “The power to tax is the power to destroy.” It is a prudent warning that the Copyright Royalty Board (CRB) at the Library of Congress should remember as it is furiously lobbied and pressured by the recording industry to raise the royalty rates streaming companies like Pandora must pay to play music online.
Technology has changed the music industry. Americans no longer are forced to buy whole records or CDs to hear the songs they love. The advent of the Internet has empowered consumers who, for a relatively modest fee or even free of charge, can have millions of songs right at their fingertips.
Rather than purchase albums, consumers now subscribe to services that give them more latitude and choices. They can move from listening to heavy metal to Mozart in just a few seconds without having to go to a record store. These highly popular companies, despite tens of millions of listeners and subscribers, struggle to turn a profit because upwards of 60 percent of their gross revenue goes straight out the door in the form of royalty payments. The record industry wants more and is demanding that the government squeeze blood from a stone. Hiking the fees could damage, if not destroy, the financial viability of streaming music altogether.