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
This screen shot shows Pandora's internet radio platform, which allows users to create their own stations based on artists or songs they like.
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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." (Read more Internet radio stories.)