Will Pandora Be an Internet Radio Royalty Casualty?

Lynne Kiesling

Pandora is a vast online radio resource, with many subscribers who are huge fans of its services. But it may go out of existence in the near future as a consequence of Internet royalty payments:

Pandora — practically the poster child for online radio — says it will shut down if royalty rates enacted in March of 2007 are not altered soon.

Despite all of those warnings, the rates remain intact and must be observed by webcasters, even as the battle over them continues. Aside from a few concessions to small webcasters and those with lots of unique streams, Washington lawmakers have not altered the rates, which currently require Pandora to fork over 70 percent of its revenue to labels and artists. …

If Washington lawmakers want to ensure that legal music services cannot compete with under-the-radar alternatives that pay nothing to artists, they’re doing a bang-up job. …

While all forms of U.S. radio pay royalties to songwriters and publishers through rights organizations such as BMI and Ascap, record labels and recording artists have not received performance royalties from radio in this country, because radio was thought to have a promotional effect on sales. With sales flagging, labels and artists are trying to collect licensing fees from all uses of their music, including radio. Satellite radio stations must pay a small percentage of revenue, while terrestrial radio stations currently pay no royalty to labels and recording artists.

As I’ve asked here at KP over and over and over and over and over, why does this unreasonable and demonstrably poor policy persist? Is the U.S. Copyright Royalty Board that clueless? Or is it just that the broadcast radio interests are really good at playing them?

Pandora has already ceased streaming radio to the U.K. because of these royalties that they have to pay and terrestrial stations do not. Is it going to take the death of a large, popular site like Pandora for meaningful change to happen here?

The Save NetRadio Coalition has more information and ways to make sure that this issue stays in Congress’s face until they muster the gumption to deal with it.

2 thoughts on “Will Pandora Be an Internet Radio Royalty Casualty?

  1. We recently launched an internet radio platform called Highnote which we feel is the scalable business model for streaming music. The idea is to bring artists and listeners together. What’s unique is the promotional platform we’re building which is targeted and performance based, and it’s built specifically for streaming music. Labels and independent artists get promotional exposure for their new music in the most natural way – played directly after artists that are similar. Ex: I am an unsigned band that cites Coldplay as an influence, I can promote my track into streams after listeners hear a Coldplay song. The crucial thing here is that revenue is cost-per-click based rather than cost-per-play… so a) bands/labels pay only for qualified traffic to their web sites and b) the user experience is optimized via click-through rates and user response to the music. And no intrusive ads. Just music, and just the type of music the listener wants to hear.The site is at highnoteradio.com. Feedback welcome.

  2. Congress members frankly are too old and technologically clueless to have any good reason to resist well-funded industry lobbying campaigns. I don’t think that will be the case 10 or 20 years from now when today’s tech-savvy generation starts holding office and regulatory positions. The content industry’s power has peaked or is peaking, in my opinion. Time is not on their side.

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