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August 11, 2008
An End To A 'Reprieve' - Bye Bye Web Radio?
A little over a year ago I was writing about negotiations between SoundExchange and Web streamcasters. The issue was a set of exorbitant new fees authorized by the US Copyright office. Back then it appeared that Congress might even pass some kind of legislation. In the glare of scrutiny and public outcry, the Cartel backed down, a little. Web radio didn't die.
But it did ingest a poison - a slow-acting set of fees and restrictions that may yet kill the nascent industry. According to Peter Whoriskey's story in this weekend's Washington Post Pandora may have to shut down due to the fees.
Pandora is wildly popular by Internet standards: over 1 million online customers, a top-10 app for iPhone, and adding 40,000 new customers/day. With numbers like that, why would the business shutter? Well, according to the story, 70% of the anticipated USD 25 million all those customers generate will go to fees. The company is losing money even as it grows, when it should have gone revenue-positive next year.
Last year it was Markey who tried to broker a deal. This year the Congressional go-between seems to be Berman (D-CA) but he's frustrated to the point of pulling the plug. Regardless of individual Congresscritters' frustrations, nothing seems to be in the works to fix the fundamental inequalities that force Web casters to pay rates more than double that of satellite radio. Sat radio rates are based on percentage-of-revenue, a metric that Web radio has asked for repeatedly and never gotten; Web radio pays per-song. Traditional radio, of course, still pays no performance royalties.
Oddly, the Pandora blog has nothing about this; last year Westergren used the blog as a hell-raising tool.
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