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Royalty Rates May Kill Internet Radio Site

Popular Pandora threatens to pull plug without a new deal

By Kevin Spak,  Newser Staff

Posted Aug 16, 2008 3:06 PM CDT
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(Newser) – One of America's most popular online radio sites may pull the plug without a new deal on royalty rates, the Washington Post reports. Pandora attracts 1 million listeners a day to create personalized radio stations, but also pays 70% of its revenue in per-song royalties—a fee traditional radio has avoided. “We're approaching a pull-the-plug kind of decision,” said Pandora founder Tim Westergren.

Last year a federal panel doubled the royalty web broadcasters must pay per-song, per-listener. Now a California lawmaker aims to broker a deal with SoundExchange, the music industry's royalty collector, but progress is slow. Westergren called it "a last stand for webcasting.” A SoundExchange rep countered that artists must be "compensated for the blood and sweat that forms the core product of these businesses."

This screen shot shows Pandora's internet radio platform, which allows users to create their own stations based on artists or songs they like.
This screen shot shows Pandora's internet radio platform, which allows users to create their own stations based on artists or songs they like.
The internet's most successful radio company might not be long for this world.
The internet's most successful radio company might not be long for this world.   (Shutterstock)
Internet radio looks poised to die a lonely death.
Internet radio looks poised to die a lonely death.   (Shutterstock)
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