Analysis Group Consultant, Affiliate Study the Impact of Increased Royalty Payments on the Music-Streaming Industry

June 06, 2013

The impact on webcasters of a 2007 decision by the Copyright Royalty Board (CRB) to increase online royalty payments is the subject of a research paper by Harvard Business School professor and Analysis Group academic affiliate Josh Lerner and Manager Greg Rafert. The research was sponsored by the Computer & Communications Industry Association. In the white paper "The Music Streaming Industry in the U.S. and EU: The Effects of the 2007 Copyright Royalty Board Decision on Venture Capital Investment," the authors discuss trends affecting the music-streaming industry over the past decade, including the dot-com crash and various regulatory changes. Particularly damaging to webcasters in the United States, the authors say, was the CRB's decision to dramatically increase Internet royalties over the period from 2006 to 2010. "Webcasters found the royalty rates for radio streaming too high for their businesses to remain profitable," they write. The authors' research results indicate that the CRB decision had "a significant and negative effect" on private-equity venture capital investment received by music-streaming companies in the United States. "In the absence of the detrimental CRB decision, [these] companies may have received an additional $108 million of investment during our analysis period," they say.

Read the white paper