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
Royalty Rates May Kill Internet Radio Site
This screen shot shows Pandora's internet radio platform, which allows users to create their own stations based on artists or songs they like.

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.)

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