[emmett]

Well, the suppliers may face a federally-mandated price ceiling, but they also have a federally-mandated monopoly on their own product (copyright).

It's not like you have a natural right to prevent people from copying your stuff - we grant that right as a society, subject to very definitive limitations.

The real issue here is piracy -- if Pandora didn't have to compete with free, they could raise their prices and this whole issue would go away. As long as piracy exists, the price of music will be driven down. You can't blame Pandora for that.

[aston]

The copyright here is essentially nullified by the compulsory licensing. Without congress, Pandora would have to negotiate directly with the labels (see Spotify's much higher payouts and upfront licensing fees), and with congress, the labels can't even take their music away from Pandora if they don't like the price.

[emmett]

But without copyright, Pandora could simply copy the music and sell the service without paying any royalty at all. It's only by government fiat that Pandora has any costs, period. Copyright hasn't been nullified, it's just been altered.

Without congress, Pandora wouldn't have to negotiate with anyone at all, because there wouldn't be any copyright on the music to stop them.

You can argue that compulsory licensing is good or bad for artists/distributors/consumers in the long run, and it's an interesting debate. But it's not like there's some default natural right that is being violated here.