Editoral : Internet's Largest Radio Station To Close Doors

Pandora, one of the biggest Internet radio stations in the U.S., could soon go out of business because of the cripplingly high royalty fees imposed on all Web-based radio networks. Surely it’s high time for equality amongst the various radio operations.

Radio is radio, or so I thought. But it seems that when it comes to royalty fees, all radio isn’t equal. Because of how old the traditional form of radio is, the fees put in place concerning royalties are minimal. The other end of the scale sees the fairly new concept of Web-based radio stations paying a high rate of royalties. In the middle is Satellite radio.

Last year saw The Copyright Royalty Board order the per-song performance royalty that Web radio stations pay to double. By 2010, this means that every time a song is played on an Internet radio station, that station will have to pay 19/100 of a cent per song per listener. This compares to a rate of 8/100 in 2006.

According to The Washington Post, this prospect means Pandora, which has about 1 million regular listeners and is adding 40,000 new ones every day, may go out of business. The claim isn’t just pulled out of thin air either, but comes directly from the mouth of Tim Westergren, the founder of Pandora and its Music Genome Project which allows listeners to build their own radio station based on musical preferences.

He said: We’re approaching a pull-the-plug kind of decision. This is like a last stand for webcasting. 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.

We’re funded by venture capital. They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like its headed towards a solution, we’re done.

Pandora has already shut down all of its services outside of the States due to the increasing royalty fees, with the UK being the last to go in January, 2008. And the end could soon be nigh for the U.S. station too. The company is soon to start airing ads in an attempt to increase revenue but with the royalties claiming about 70% of the company’s current turnover, it will take a lot of adverts to fill the monetary shortfall.

The record companies are being stupid yet again in the way they deal with an emerging technology. They, and the idiotic decision-makers in Washington, are basically crippling a media innovation before it can truly prove its worth. As usual, its the average member of the public who is set to lose out. There may soon be over 1 million U.S. citizens beating down the doors of whatever public body makes Pandora go out of business.


The Reggae News Agency


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