• Pandora on Death Row?

    According to an interview conducted by the Washington Post, Pandora founder Tim Westergren says that Pandora may have to close up shop.

    We're approaching a pull-the-plug kind of decision. This is like a last stand for webcasting.
    Why might Pandora shut down you ask, well, my friends, you have the wonderful copyright holders and their good buddies the US Government to thank for that. Last year a panel decided it was a wonderful idea to more than double the royalty fee that internet radio has to pay the song owners. What is interesting here is that "traditional" radio does not pay the fees that web radio is so violently being slapped in the face with. Satellite radio pays something nominal in comparison.

    According the article Pandora is set to pay 70 percent of its expected 25 million dollar income this year to <strike>corporate monster record labels</strike> artists.

    There is hope however, Represenative Howard Berman, Democrat of California, is trying to work a deal between webcasters like Pandora and SoundExchange, the entity who handles all of these shenanigans for the "artists" and record labels. Their name is grossly misleading however, as it seems they are doing everything but exchanging sound. In fact the only sound they want to exchange is that click of an opening briefcase full of <strike>ransom</strike> royalty money.

    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.
    For those of you that don't remember, or simply don't know, Pandora was funded by venture capitalist, and for the first time since it served its first song, Pandora was on its way to making a profit in 2009. Wintergren fears that the decision made by the government will tear apart the business model as a whole and that Pandora and organizations like it will not be able to successfully seek out funding.

    SoundExchange defends it stance by essentially saying that providers like Pandora should have to pay more money, because, well, the artist should be making more from the internet. Yup, that's their reason. Apparently when you listen to music on the tubes an artist should get more money than if you tuned in on your stereo. They've got some real smart cookies over at that thurr SoundExchange thangy. Evidently they're smart enough to push the government into increasing the fee from 8/100 of a cent per play to 19/100 of a cent per play.

    Note: Figure is for amusement only, not all information is available so some of it was educationally guessed from the information at hand.

    SoundExchanges official stance:

    SoundExchange officials argue that because different media have different profit margins, it is appropriate to set different royalty rates.

    Moreover, they complain, Internet radio stations have done too little to make money from playing their songs.
    They want money, money they know isn't being made. If what they say is ture, that different media has different profit margins, and, by their own admission, internet radio isn't making money, shouldn't it have then have the lowest royalty rates. I guess they're playing with potential future revenue streams, streams that will only be large enough if they get to make the service what they want – all about money.

    When we have our board meetings, the central topic is the revenue trajectory, not how happy our users are.

    – Tim Westergren
    Pandora is one of the most popular websites around, with 40,000 new listners a day, and is currently ranked number 7 in the Top Free apps in the AppStore with an outstanding 4.5 Star rating.

    [The Washington Post]
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