The Death Knell Tolls for Pandora and Other Webcasters

A couple of weeks ago a little known government body called the Copyright Royalty Board set new rates for webcasters like Pandora, Last.fm and other streaming music services. The new rates made many webcasters and streaming music entrepreneurs apoplectic. Only being tangentially related to the streaming music space I was a bit confused by all the doom and gloom talk that had lots of really intelligent and articulate folks claiming that this was the end of streaming radio. It all sounded so over the top that I sent an email to the ever accommodating Tim Westergren, of Pandora, asking for his take on the controversy. I sent him a series of questions largely based on some projections Michael Robertson posted to the Pho List and one of this responses at the time really shocked me.

“There will be no Internet radio by the end of 2007 if these [new rates] go unchanged.”

At the time I thought there was no way that the music industry would allow the mostly legal and fee paying interactive music services to go under. Services like Pandora and Last.fm have been hailed in the media as the new “it” companies for music promotion and fans across the globe embrace these services for music sampling and discovery. But as of yesterday, influenced by the ever present RIAA in the guise of its bastard child SoundExchange, the CRB denied webcasters like Pandora’s attempts to rehear the case. Effectively putting an end to the nascent interactive radio business.

The survival of Pandora and all of Internet radio is in jeopardy because of a recent decision by the Copyright Royalty Board in Washington, DC to almost triple the licensing fees for Internet radio sites like Pandora. Tim Westergren in letter to Pandora commuity

In what seems like a last ditch effort to make a change to the deadly new rates, Tim Westernger sent a letter to the Pandora community asking people to write their lawmakers for a literal stay of execution. If you’ve enjoyed Pandora and Last.fm you might want to go ahead, sign the petition and get involved. Normally I’d also suggest that you go ahead and enjoy Pandora and Last.fm before they go out of business, but since the rates are being retroactively enforced, they apply to everyone that used the service in 2006 and everyone that uses it now, potentially tripling the fees these services owe copyright holders.