The end is nigh for Pandora – Internet radio crippled by royalties
Pandora, one of the biggest Internet radio stations in the U.S., could soon go out of business because of the cripplingly high royalty fees imposed on all Web-based radio networks. Surely it’s high time for equality amongst the various radio operations.
Radio is radio, or so I thought. But it seems that when it comes to royalty fees, all radio isn’t equal. Because of how old the traditional form of radio is, the fees put in place concerning royalties are minimal. The other end of the scale sees the fairly new concept of Web-based radio stations paying a high rate of royalties. In the middle is Satellite radio.
Last year saw The Copyright Royalty Board order the per-song performance royalty that Web radio stations pay to double. By 2010, this means that every time a song is played on an Internet radio station, that station will have to pay 19/100 of a cent per song per listener. This compares to a rate of 8/100 in 2006.
According to The Washington Post, this prospect means Pandora, which has about 1 million regular listeners and is adding 40,000 new ones every day, may go out of business. The claim isn’t just pulled out of thin air either, but comes directly from the mouth of Tim Westergren, the founder of Pandora and its Music Genome Project which allows listeners to build their own radio station based on musical preferences. He said:
We’re approaching a pull-the-plug kind of decision. This is like a last stand for webcasting. We’re losing money as it is. The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we’re doing is wasting money.
We’re funded by venture capital. They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like its headed towards a solution, we’re done.
Pandora has already shut down all of its services outside of the States due to the increasing royalty fees, with the UK being the last to go in January, 2008. And the end could soon be nigh for the U.S. station too. The company is soon to start airing ads in an attempt to increase revenue but with the royalties claiming about 70% of the company’s current turnover, it will take a lot of adverts to fill the monetary shortfall.
The record companies are being stupid yet again in the way they deal with an emerging technology. They, and the idiotic decision-makers in Washington, are basically crippling a media innovation before it can truly prove its worth. As usual, its the average member of the public who is set to lose out. There may soon be over 1 million U.S. citizens beating down the doors of whatever public body makes Pandora go out of business.
Related Posts:
August 17th, 2008
I am currently listening to Pandora and if they shut it down I don’t know what I will do! I love Pandora and if I wasn’t on a college budget then I would kindly donate to Pandora! I think that and selling ads maybe the only way to save Pandora!
August 22nd, 2008
By listening to Pandora I have on more than one occasion been inspired to go out and buy an artist’s album because of what I heard. Pandora should be collecting money for advertising for musicians!
August 28th, 2008
Seriously, music biz. Get your heads out of your nether regions, update your business model and stop steamrolling your customers with legislation that hurts you more than them (internet royalties). Pandora has a new and effective strategy to connect people with new music. You’re chopping off your own feet.
Internet doesn’t = bad. Accept the fact that you no longer have a stranglehold on distribution and focus on some other way to buoy your business. If there’s any creative talent that hasn’t already jumped ship….
August 28th, 2008
NO!!! Pandora is life! Holy War on royalties i say! To the barracks men!(and women too, i guess)
August 28th, 2008
I would commit arson because of this but gas is just too damn expensive. But yea the record companies are simply encouraging people to pirate music by making it a pain in the ass to get it legally.
September 1st, 2008
All the more reason to pirate music. Try thepiratebay and mininova. Download utorrent and you are good to go!! Books, music, movies and shows for free.
September 2nd, 2008
Well shit.
Any of you guys US citizens that feel like writing your congressman? Long shot, but we need to do SOMETHING.
September 2nd, 2008
Here’s another example. All I wanted to do last week was watch Prince’s Purple Rain video on youtube since I was attempting to learn the guitar portion of the song. Unfortunately, every video I clicked on didn’t have the sound, just video. After researching a bit further I found out that Prince demanded that his video’s be removed from youtube. WTF?? So, to make myself feel better I went to thepiratebay and downloaded every single one of the bastards albums. And I’m seeding them too so other people can get them faster. I realize that all artists aren’t dicks like Prince, the record companies are usually to blame.