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Billy Joel, Rihanna fight Pandora over compensation

Some of music's most notable names, including Billy Joel, Rihanna and Missy Elliott, have signed an open letter to Pandora Media Inc. opposing the online music company's push to change how artists are compensated.

Pandora is currently lobbying lawmakers in the U.S. Congress to pass the "Internet Radio Fairness Act," which would change regulation of how royalties are paid to artists.

A group of 125 musicians who say they are fans of Pandora argue the bill would cut by 85 per cent the amount of money an artist receives when his or her songs are played over the Internet.

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"Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That's not fair and that's not how partners work together," said the letter, to be published this weekend in Billboard, the influential music industry magazine.

A statement with an advance copy of the letter was released on Wednesday by musicFirst, a coalition of musicians and business people, and SoundExchange, a non-profit organization that collects royalties set by Congress on behalf of musicians.

A representative for Pandora did not immediately respond to a request for a comment.

The issue of how musicians are paid for Internet streaming of their songs has been a flashpoint for Pandora.

Pandora is a mostly advertising-supported online music company, founded more than a decade ago, that streams songs through the Internet. In October, it said its share of total U.S. radio listening was almost 7 per cent, up from about 4 per cent during the same period last year.

Pandora's success has been double-edged – the more customers it gains, the more money it has to pay overall for rights to stream music.

So far, that rate is set until 2015.

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Pandora, along with other music services such as Clear Channel Communications, is supporting the bill on grounds that different providers, such as satellite and cable, pay different rates.

"The current law penalizes new media and is astonishingly unfair to Internet radio," Pandora said on its website.

"We are asking for our listeners' support to help end the discrimination against internet radio. It's time for Congress to stop picking winners, level the playing field and establish a technology-neutral standard."

The Internet Radio Fairness Act is a bipartisan bill sponsored by U.S. representatives Jason Chaffetz and Jared Polis along with Sen. Ron Wyden.

Shares of Pandora were down 3.4 percent at $7.40 on Wednesday afternoon on the New York Stock Exchange.

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