Thursday, August 21, 2008

Pandora Shutting Down Because of Greed

The free internet streaming site Pandora - may shut itself down. This service, which I just recently "discovered" as an iPhone application (btw: it's one of the top 10 most downloaded apps - about 40,000 per day) - allows users to set up radio "channels" based on a song or artist they like.

The service then uses the Music Genome Project to make educated guesses on other songs you might like based on the characteristics of the song itself. Every user can have an unlimited number of "stations" that plays similar music. So, whether you're into polka but have a Van Halen bent - Pandora's got you covered. The service serves about a million listeners per day.

And now it looks like they are going to shut it down. Why? Greed. Stinkin' record company greed.

Back in March, 2007, the Copyright Royalty Board (CPB) decided to drastically raise royalty rates (including 17 months' of retroactive payments) for streaming Internet radio. Not only that but they changed the entire model froma percentage of revenue to a per-song, per-listener fee.

It seems that the copyright holders (in most cases they're record companies) - have had their panties in a twist ever since the death of the LP and this whole "digital thing" came to be. So, basically, they pressured that obscure federal panel to ratchet up the fees paid by webcasters. Only webcasters.

"Real" radio stations pay ASCAP or BMI for the compser royalty. But the webcasters are being held up to pay a sound recordings royalty as well.

The problem is that for Pandora the increased fees will amount to over 75% of their yearly revenue of $25 million - up from 12% under the recently-expired royalty agreement that the RIAA had negotiated in 2002.

Basically, for providing a great, customized, unique service - they are being punished and are losing money.

As a last-minute attempt to keep things going Rep. Howard L. Berman (D-Calif.) is trying to broker a last-minute deal between webcasters and SoundExchange (the fascist front organization that represents artists and record companies). The hope is that Mr. Berman can ram some sense into negotiate a deal that would reduce the per-song rate set by the pencil pushing lobby money taking federal panel CPB last year.

Fingers crossed here!

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