Oakland (CA) – Escalating music royalties could put Internet darling, Pandora, out of business. In a recent interview with the Washington Post, Tim Westergren, the founder of the online radio station, says royalties could approach 70% of revenues and that the company is approaching its “last stand”. Last year, the Copyright Royalty Board ruled that song royalties would increase from 8/100 of a cent per song per listener to 19/100 of a cent per song per listener in 2010.
Pandora is a free website that lets users create their own radio stations based on their favorite artists. It attracts an estimated 40,000 new customers a day and is a favorite amongst iPhone and other mobile phone users. Personally, I’ve been listening to Pandora for a few years and consider it to be one of the best attractions on the web today. There’s no messing around with crap music, just type in the artist you like and only their songs will be played.
SoundExchange collects royalties on behalf of record labels and artists and US Congressmen are trying to mediate lower rates. Currently online radio stations are levied much higher royalties per song than traditional radio stations.
Pandora makes money with embedded ads from famous companies like Carls Junior and Don Julio. These ads bring in $25 million a year – not bad for web startup – but Westergren says future royalty payments would eat up $17 million of that take. Such a huge percentage could soon doom the company, a company that is approaching a “pull-the-plug” decision according to Westergren.
Pandora is a free website that lets users create their own radio stations based on their favorite artists. It attracts an estimated 40,000 new customers a day and is a favorite amongst iPhone and other mobile phone users. Personally, I’ve been listening to Pandora for a few years and consider it to be one of the best attractions on the web today. There’s no messing around with crap music, just type in the artist you like and only their songs will be played.
SoundExchange collects royalties on behalf of record labels and artists and US Congressmen are trying to mediate lower rates. Currently online radio stations are levied much higher royalties per song than traditional radio stations.
Pandora makes money with embedded ads from famous companies like Carls Junior and Don Julio. These ads bring in $25 million a year – not bad for web startup – but Westergren says future royalty payments would eat up $17 million of that take. Such a huge percentage could soon doom the company, a company that is approaching a “pull-the-plug” decision according to Westergren.