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Internet Radio is saved

8 July 2009 15:21 by Andre "DVDBack23" Yoskowitz | 8 comments

Internet Radio has been saved today, for the time being at least, after SoundExchange signed a deal with radio webcasters.

SoundExchange is the organization in charge of collecting royalties for musicians and the record labels relating to online music.

The deal, settled after 2 1/2 years of very public disputes over proposed royalty increases, will allow Internet Radio to survive. Webcasters will not be forced to pay per-song royalty payments that many webcasters claimed would put them out of business.

According to the LATimes, webcasters can now "choose an alternative rate structure that allows them to pay lower per-song royalties through 2015, or 25% of their revenue."

"If the rates weren't resolved, we were sunk. So this is a huge relief," adds Tim Westergren, founder of Pandora. Westergren adds that Pandora, through its site and iPhone App, has about 30 million registered users.

The company expects to have $40 million USD in revenue for 2009, and could possibly now be profitable next year.

The new royalty deal will start at a per-song rate of 0.08 of a cent per listener per song and will rise to .14 of a cent by 2015. The proposed rates had been .0762 for the first year, and then .19 of a cent for 2010, a gigantic increase.

The LATimes adds that "under the new agreement, large webcasters pay whichever is greater -- the per-song fee or the percentage of revenue. Smaller commercial webcasters -- those with $1.25 million or less in total revenue -- would pay between 10% and 14% of their sales or 7% of their expenses, whichever is greater."

"It's a substantial reduction in the per-song streaming fee, and that was really the crux of the problem for us," notes Westergren.

Permalink to this article | Topics: MP3 & Digital Audio Online music services

Pandora Radio now available on Android (9 September 2009)

Pandora's future looking up following royalties agreement (15 July 2009)

iPhone finally headed to China? (11 July 2009)

Older generation chooses internet radio but their kids prefer MP3 (20 April 2009)

SoundExchange seems desparate for an internet radio royalty deal (11 February 2009)

Internet Radio saved? (29 September 2008)

Pandora and Internet radio need your help (28 September 2008)

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Discuss this article!
H0bbes (Junior Member) 9 July 2009 3:22
Another fine example of the wonderful RIAA type people who rape people for money, funds that ALL of which goes directly to the artists! Because they care SOOO MUCH about the artists! Idiots. [ + quote] This message has been edited since posting. Last time this message was edited on 9 July 2009 3:22
Jaussi (Member) 9 July 2009 4:43
Does this also mean that Pandora can work outside US someday again, even for a monthly fee? [ + quote]
Mez (Senior Member) 9 July 2009 12:12
I can't believe they were expecting .19 USD per listener next year. They love to blame the world for their failure to make money. Here is yet another prime example of their insanity. They want to kill any revenue stream they have. They never have been able to understand a million pennies are better than one dollar. The math must be way too advanced for them. [ + quote]
Mr-Movies (Member) 9 July 2009 15:50
This "and then .19 of a cent for 2010" must be mis-worded because that would be $0.0019 per song not $0.19 or 19 cents as Mez states. If it is 19 cents per song which would be my guess they are nuts, which we all know they are. Maybe they should put provisions in for rates adjusted to a full moon, carbon credits, and leap year just to make it more complex. You got to love the music industry, NOT! [ + quote]
DVDBack23 (Staff Member) 10 July 2009 2:09
Mr-Movies, you are correct, they were asking for $0.0019 per song, a very high rate that luckily they backed down on. [ + quote]
Mez (Senior Member) 10 July 2009 7:51
Still the fee is crazy high but not completely insaine. The will ruin the world's music before they go under. I am glad for P2P and mp3 players. With the advent of newsgroups, there will always be a vast store of black market music that will remain secreted away. They will preserve what was shared forever. I have what I want so they can charge a million per tune for all I care! [ + quote]
pphoenix (Inactive) 12 July 2009 3:39
*Originally posted by H0bbes:* Another fine example of the wonderful RIAA type people who rape people for money, funds that ALL of which goes directly to the artists! Because they care SOOO MUCH about the artists! Idiots. RIAA, CRIA, SOUNDEXCHANGE, BPI, IFPI. # Sony BMG Music Entertainment # Warner Music Group # Universal Music Group # EMI RIAA Claims Ownership of All Artist Royalties For Internet Radio http://slashdot.org/articles/07/04/29/0335224.shtml "With the furor over the impending rate hike for Internet radio stations, wouldn't a good solution be for streaming internet stations to simply not play RIAA-affiliated labels' music and focus on independent artists? Sounds good, except that the RIAA's affiliate organization SoundExchange claims it has the right to collect royalties for any artist, no matter if they have signed with an RIAA label or not. 'SoundExchange (the RIAA) considers any digital performance of a song as falling under their compulsory license. If any artist records a song, SoundExchange has the right to collect royalties for its performance on Internet radio. Artists can offer to download their music for free, but they cannot offer their songs to Internet radio for free ... So how it works is that SoundExchange collects money through compulsory royalties from Webcasters and holds onto the money. If a label or artist wants their share of the money, they must become a member of SoundExchange and pay a fee to collect their royalties.'" http://www.dailykos.com/storyonly/2007/4/24/141326/870 [ + quote]
Mez (Senior Member) 13 July 2009 7:53
pphoenix, you got that right. Your forgot the media's responce to the writers guild wanting a real peice of the pie. Even though the law was to "protect the artists", the media claimed the business modle was too complex for them to get a stright percentage. There was a 6 month strike over that one. [ + quote]