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Filed under: Audio, Internet

Internet Radio is (almost) saved?

last.fm playerRemember how last year there was a big to do about the future of internet radio? The US Copyright Royalty Board imposed new, higher fees for online broadcasters, and web radio services like Pandora and Last.fm complained that the new fees would effectively put them out of business. A bill was introduced in Congress to work things out, but that never really went anywhere. But now, a year and a half later, the Digital Media Association, which represents a number of online music distributors, announced an agreement with copyright holders. It just doesn't exactly cover internet radio.

Here's the deal. If you're a company that provides limited music downloads or interactive streaming audio, you have to pay 10.5% of your revenue in royalties, less any amount owed for performance royalties. That covers subscription based services like Rhapsody which let you download music to your PC, so long as the music becomes useless when you stop paying up. It also covers interactive sites like Last.fm which let you select the songs you want to play.

What it doesn't cover are internet radio sites like Pandora or Radio Paradise which provide a stream of music for you selected by a human being (not yourself) or a computer algorithm. No agreement has been reached yet to cover these services.

The good news is that if the parties involved were able to work out a reasonable deal for certain types of online music services, there's hope that Pandora and other online radio companies can be saved... eventually.

[via Techmeme]

Filed under: Audio, Internet

High royalty fees could cause Pandora to close its music box

Pandora blues
Music discovery service and online radio station Pandora may have to shut down, thanks to high royalty fees imposed last year by the US Copyright Royalty Board. Pandora founder Tim Westergren says his company is currently paying 70% of its revenue to SoundExchange, the organization that collects royalties for artists.

While nobody is arguing that artists shouldn't be paid for their work, this Copyright Royalty Board decision has always seemed a bit shortsighted. First of all, artists don't make a penny for music broadcast on traditional radio, even though radio station owners bring in plenty of dollars through advertising. Second, since Pandora doesn't just stream audio, but determines a listener's musical tastes and streams music from artists they might like, the service is an amazing promotional tool for musicians who might otherwise not be heard. Why would an organization that says it's concerned with paying artists try to shoot that service in the foot?

Webcasters have to pay a fee every time they stream a song -- and that fee is rising from 8/100 of a cent per song last year to 19/100 of a cent per song by 2010. The new royalty rates are hitting Pandora especially hard because the company streams hundreds of thousands of songs to hundreds of thousands of listeners simultaneously. I assume similar services like Last.fm are also feeling the pinch, but Last.fm was recently purchased by media giant CBS, while Pandora is an independent company with shallower pockets.

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