RSSWeb royalties compromise means fee hike for Pandora, perhaps others
By Scott M. Fulton, III | Published July 7, 2009, 6:26 PM
The proprietors of online streaming radio, including Pandora's Tim Westergren, are finding themselves surprised today to be cheering an agreement with performance rights holders that has them paying as much as 25% of their revenue in royalties. But that's better than all of their revenue, which was a literal possibility in 2007, and better than 70% which Pandora and other services were paying at this time last year.
Under the new deal announced today, webcasters are being offered a so-called "alternative set of rates and terms" by SoundExchange, the organization responsible for managing performers' royalties in the US. Those that agree to SoundExchange's terms must adopt a new and more rigorous reporting schedule for reporting their revenues right down to the dollar -- the reporting system that SoundExchange insisted upon two years ago. It's an even more rigorous reporting system than what the US Copyright Royalty Board agreed to last January, when it made a reluctant U-turn in favor of revenue-based royalties accounting.
As the RAIN newsletter reports today, webcasters agreeing to the plan must keep complete, per-performance records of what songs were played, and to how many listeners they were played, in logs that they must agree to keep available for at least four years. In exchange, royalty rates for those willing to submit to greater transparency, will be capped at 25% of reported revenue. Those who prefer not to agree to this reporting system will continue to pay the royalties rates set by the CRB earlier in the year.
"It's a creative, groundbreaking approach that we wanted to try, and we hope it will work well for everyone involved -- the artists, labels and eligible webcasters," SoundExchange Executive Director John Simson stated earlier today. Westergren's response was a lot less formal, stating in his blog this afternoon, "Pandora is finally on safe ground with a long-term agreement for survivable royalty rates. This ensures that Pandora will continue streaming music for many years to come!"
But the change will not be without cost to some listeners, it turns out: Non-subscribers who have been listening to Pandora's free, ad-supported service for 40 hours per month or more, will be asked to contribute a $0.99 fee to continue listening for the remainder of the month. "We hate the idea of limiting anyone's listening, but we have no choice but to react the economic realities of the new rates," Westergren writes.
CBS-owned Last.fm had not issued a statement by press time.
I love Pandora...and this article just reminded me I've been wanting to get a premium account with them. ......... Done! $36/yr for higher quality audio, no ads/commercials, etc. Now I probably won't even have to look for the stuff on emule...it'll be conveniently ripped in high-enough-quality using StationRipper hehehe (hopefully that software still works!)
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|I dont understand why Pandora charges $.99 for listening beyond 40 hours in a week. Imagine if your local FM station charged you a buck if you listened too long. If an FM station can make a go of it with advertising, why can not Pandora? Also if the new rates are a cut of Pandora's profits, then again, there is no reason that the new rates would cause Pandora to charge the extra amount. Its just "extra" profit. Come on Pandora! You have a great concept, dont blow it!
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|$0.99 is a steal, it really is. When you consider how much it really costs to stream music, you're very likely not to be able to make up that cost with advertising alone. Think about it this way: your cable TV still costs you money for the basic package even though there's advertising all over the place.
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|More restrictive than that even... It's not 40 a week, but 40 a month. That means that if you listen every day at work, you've got 2 hours or less a day.
Meh, personally I'll just keep using Flycast and other free services.
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