Record labels and the online radio industry have reached a deal on royalties that insiders think will allow the medium to survive, the New York Times reports. Larger sites like Pandora will pay the labels 25% of revenue or up to 14 cents for every song they stream—whichever is higher—and small sites will pay 12% to 14% of revenue. Prior to the deal, rates were set to hit 19 cents per song, and many so-called webcasters said they couldn't survive.
The chief of the nonprofit that manages digital royalties says that while the old system was “appropriate and fair,” the new “experimental approach” will allow “webcasters the opportunity to flesh out various business models.” Pandora's founder was cheered by the lower fees but not entirely satisfied. “I don’t think anyone’s going to look at this and say, ‘I’m really happy, I got everything I want.’”