Popular Internet Radio Station About To Close?
Monday, August 18th, 2008Pandora, an Internet radio station that allows listeners to create their own virtual radio station based on their musical tastes may soon close as it struggles to meet its royalty commitments.
A ruling by a federal panel last year saw Internet radio stations forced to pay relatively high royalty fees in order to play music to its listeners. While normal FM/AM stations pay nothing to play music… and satellite stations pay approximately 1.6 cents per hour per listener… by 2010, Pandora and other Internet radio stations must pay 2.91 cents.
The cost of paying such royalties has already forced a number of Internet radio stations out of business and Pandora’s founder, Tim Westergren, has said that Pandora may have no choice but to follow suit. According to the company, an unsustainable 70 percent of its $25 million in annual revenues is paid in royalty fees.
Which may be exactly what the record labels want. Or think they want. After all, if more and more people are choosing to listen to music online… then killing off services like Pandora - i.e. services that are distributing the labels’ music - may not ultimately be in their interests…
Source: Michael Arrington, “Perhaps Pandora Must Be Our Sacrificial Lamb”, Tech Crunch, August 16, 2008, Corvida, “Pandora On the Verge of Closing Shop”, Read Write Web, August 16, 2008
