When SoundExchange, the organization that represents many labels and artists, proposed steep new royalty rates for radio webcasters last year, they shortsightedly killed off their own revenue stream. Instead of their proposed rates being cut back as part of a standard negotiation, they were surprised to see the U.S. Copyright Royalty Board reject opposing arguments and adopt SoundExchange’s rates fully. Now Pandora, the popular streaming music site, says it’s paying over 70% of its revenue in royalties, and unless Washington changes the rates soon—which looks unlikely— they will have to shut down.
“We’re losing money as it is,” founder Tim Westergren’s told The Washington Post. “The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we’re doing is wasting money,” adding, “We’re funded by venture capital. They’re not going to chase a company whose business model has been broken. So if it doesn’t feel like its headed towards a solution, we’re done.”
So where can you get your Pandora-like fix in the future? There’s Nutsie, which streams a rough facsimile of your own music library to your phone, but when we tried it a year ago it was Symbian-friendly (albeit buggy) and now it seems to just run on Blackberry devices. If you’ve got the patience to upload all your music to the fee-based backup service mp3tunes.com, you can access your backed-up library from a PC (as well as several other types of devices) and stream the songs, but only files in mp3 format (no aac streaming for you!). There’s always last.fm, a great recommendation service (I like it better than Pandora, actually) which now has the deep pockets of CBS to support it and seems to be working on a subscription model it will introduce sometime in the future. Or finally, SimplifyMedia offers a free application that will let you share your iTunes library across the web to other computers, your iPhone, and up to 30 friends. (NB:the iPhone version of the app costs money.)
“Pandora Could Be First Major Casualty of New Royalty Rates” [Wired]
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@GamblesAC2:
I wasn’t sure if we needed to do that since we are doing it for no money and we’re just playing the beginning of the song and talking over most of what we play. I guess it’ll just be indy bands that enjoy the exposure from this point forward
@Mayor McRib: The RIAA and its ilk have shot themselves in the foot so many times in the past 20 or so years that I’m amazed they would even have feet left to shoot. Idiots. Way to screw yourselves out of even more money.
@WEGGLES90: Know what you mean. I don’t really have many friends (on lastfm that is), and hear about new artists from other sources so I mostly just ignore recommendations on lastfm. I really only use it for personal reasons, I’ve always seen it as a good app where I can track my own personal music listening habits-nothing more, nothing less.
In Pandora, I once typed in Eels and found Wilco, which was my first time hearing them. Since then, I’ve purchased CDs (!) by Wilco, Golden Smog, Sun Volt, and Uncle Tupelo. One Pandora search = many purchases! It’s good for business!
@GamblesAC2: “pubic performance of a copyrighted song” eh? Man, I’d like to see that.
@captadam:
Make sure you pick up the Mermaid Avenue album with Billy Bragg. I guarantee you won’t regret it.
[www.amazon.com]
My new year’s resolution this year was to change my piracy habits… specifically to pirate as much as possible and to never pay for zeroes and ones (music/movies), in response to the always-trying-to-outdo-itself bunch of douchebags that calls itself the recording and film industry.
So far it is going pretty well. I haven’t bought even one CD or a single track on iTunes. Last month I was able to strip the DRM off all my past iTunes purchases so now I don’t have any DRM’d content whatsoever, which is nice.
I just recently got into Pandora though since it’s free and I needed some new music for a change, so lately I haven’t been pirating as much. I guess they are trying to make it even easier for me to be 100% “underground” with my music listening, and make sure not only that they never see another dime of my money, but also never see a dime in revenue because of me (these royalties that they’re so anxious to not get after they finish killing internet radio.
Way to go assholes!
just wanted to clarify that nuTsie offers a superb web experience – not just
limited to mobile devices.
Check out the “serendipity slider” for great recommendations and some superb
playlists such as Rolling Stone Top 500, 100 Greatest Lists in tons of
subjects….
Pandora is free. I use it. I have never spent money with Pandora. 70% of the zero revenues is what sum of money?
@Rabbi Dave: There’s a fair paint to be made that it doesn’t mean the royalties are unjust solely because Pandora can’t pay the royalties. Perhaps they could do more to raise revenue.
Like, for example, including some sort of advertising at all in the iPhone app. It costs Pandora something in royalties to stream every song I listen to a song with it, and as far as I can tell they’re just donating the music to me.
When music is cheap, it’s easy to run the company with a “subscribers now, revenue later” model. But at some point that has to change.
I adore Pandora and have purchased many CDs becuase of the artists I’ve been introduced to through Pandora. I never would have heard them otherwise. I don’t listen to the radio, other than public radio. I wouldn’t mind paying a monthly fee to have Pandora. I wonder if they’re thinking about implementing a payment tier system? Pay XX a month for unlimited listening, XX a month for X number of hours. It seems a shame that the only option is free or nothing.
Nooooo. I listen to Pandora at work!
Plus it’s totally introduced me to new artists.
Stop buying and listening to the RIAA’s product. I did ages ago and still listen to plenty of music.
riaaradar.com is a good starting point people.
Remember, not all bands on Pandora are RIAA, and don’t use that as a justification for just pirating their music.
Also, Pandora does sort of have a fairly unrealistic business model. With so many people being able to listen to so many different songs at the same time, how do they expect to cover all the royalties off of a few ads?
Something needs to be done about this, perhaps a blanket license or a set % of profits gets distributed to artists in relation to their plays? I hate to think of seeing Pandora go, but I would like to see small artists get paid something if Pandora is going to have ad revenue.
I’ve always used (and enjoyed) imeem.com, it seems to be where I listen to most of my music.
I’ve always loved using imeem .com
@Nick1693: Oops! Sorry for the triple post.
Easily 25 of my past 30 CD purchases are directly attributable to Pandora.com’s service introducing me to new artists.
The Copyright Royalty Board needs to take its collective head out of its ass.
@Corporate-Shill: Ad revenue.
This is unbelievable! Pandora is amazing and the only reason why I actually bought any CDs this year. When they go I’ll save money I suppose. The stupidity of these organizations never ceases to amaze me. Do they have monkeys running the show now?
A shame. I found new artists on Pandora and purchased new music on Itunes for the first time in years. Now…well guess I will save even more money on music. I suppose music companies thinks advertising and new “pop” music acts will garner my interest? Not a chance in hell.
Many presume that the entertainment industry made a pricing error that killed off the online music streaming business.
Consider, if you will, the idea killing off online streaming was the goal of the entertainment industry.
IMHO, the music industry wants to control how you buy music, when you listen to it and on what medium you listen. Pandora and the like did not fit that business model, so they priced it such that they killed it off.
JMHO
@UnnamedUser: Yeah, but surely the recording industry couldn’t be that short-sigh–oh. Right. Guess discovering new artists is anti-American or something.
@Joafu: No, just James Hetfield, as depicted in the “Napster Bad” cartoons. Gotta keep moving those $100 Metallica cock rings, ya know…
@UnnamedUser: Agreed. And we as consumers need to adopt the same strategy. Let’s kill off the music industry mafia by identifying anything that will put a cent in their pockets and not buying it, and put our money into directly supporting good local bands and independents. Unfortunately, some very good musicians may be hurt by this, but that’s what lawyers are for: suing to get out of contracts…
Just at a glance I see two problems here that led to this:
1) The recording industries measure success solely in CD’s sold instead of potential audience reached.
2) Pandora Radio, while really fantastic in FINDING new bands that match my taste in music, is no help in BUYING that new music.
Pandora is allready paying for itself w/ banner ads, why not have links to ITunes/Amazon.com that lead directly to where I can purchase the music that I’m listening to? It seems like that would be ideal ad space for the sites that sell the music, and maybe the stats on “This many people that use the free content go buy stuff afterwords” would be what the recording industry needs to realize just how bad they’re screwing themselves by shutting down stations like this. Just my 3.4 cents (adjusted for 70% royalties).
BULLS@T!!!!!! I use Pandora everyday at work. Its a damn shame. What artists are really losing money because of programs like this? A lot of the music I listen to on a daily basis are indie bands that I never heard of before. This isnt going to help the industry, just make it harder for new artist to get their music out there.
@gmoney: There’s a mountain of cocaine that record industry execs need to purchase, and between P2P networks and the overall shitty quality of commercial music, the execs are mighty jonesin’…
sigh. nothing can replace pandora.
So let me gets this straight.
I bought all this DRM loaded music on iTunes and my iTunes application will allow me to share my library on my home network and to my apple TV -but- hold the iPhone, NOT to my iPhone over the interweb??? Did I miss the black suited RIAA vampire/lawyer sneaking up behind me?
@ne0shell: That’s where SimplifyMedia comes in.
@forgotten_dreamer: What? Clicking on any song in Pandora brings up links to both iTunes and Amazon and has for as long as I’ve used the site.
I hate this. The music industry’s greed knows no bounds. It all boils down to “Hey, we make money off of this, but lets make more. If people complain, we can say that it’s for the artist’s benefit”, never mind the fact that the artists rarely see any of the damn money in the first place.
@forgotten_dreamer: yeah seriously man, have you ever used Pandora? If you bookmark a song, it has both the Amazon and iTunes link.
Ever since I got my iPhone and the Pandora app, I have been listening to it non-stop where I’ve bought at least 30 tracks from Amazon/iTunes in the past month.
Instead of complaining, isn’t there something that we can do? I don’t want to sit back and watch Pandora die.
@SexierThanJesus:
Great. Ad revenue. I never buy anything to generate a click revenue stream. I don’t view ads, and if I did accidentally view an ad there is zero hope that I would buy the item because of a 200 pixel size blinkie light.
See the problem with Pandora’s business model? Guess what, there are hundreds, thousands more like me.
The best hope for Pandora would be receive payolla kickbacks for featuring certain songs. Ooops, somebody already tried that one and got caught.
Oops, forgot to plug this:
[www.savenetradio.org]
My congressman (Jay Inslee) rocks.
@Chris Walters: As far as I know, Simplify is free on the AppStore, too. I got it for free and its listed as free right, so I don’t know why this posting states that “the iPhone version of the app costs money.” I’m running it on my iPhone when I’m at work over wifi and it is bad ass!
C’mon Pandora…adapt! I am a huge fan of Pandora and would rather not see them close their doors. Why is it that once these innovative VC/internet/web 2.0/whathaveyou companies get successful, they become like every other company? This is a bump in the road. If your business environment changes, change your business model! Be the creative and innovative people that got you here in the first place. Don’t just quit because it got hard again!
@Joafu: No not monkeys but a bunch of old people who are so out of touch with today’s youth and technology that they can’t figure out how they can make a profit from services that are offered for free.
It took a bit of digging on Sound Exchange’s website, but if you want to try and change their minds, here’s the address:
info@soundexchange.com
or:
SoundExchange
1330 Connecticut Avenue, N.W.
Suite 330
Washington, DC 20036
It’s not right. A services that benefits the people who could have bought the songs they were listening to is going bust? I don’t know about you, but as an avid Pandora user, all the music I buy from iTunes are the albums I enjoyed on Pandora.
Thanks SoundExchange for teaching us how badly needed copyright reform is. This is nothing more than an abuse of the copyright laws and the artist you say you represent. Now that Pandora will be shut down soon because you wouldn’t balance the needs of the artists getting paid for their work and the need of artists to have outlets to connect to their potential fans.
Also thank you for the ability of artists and fans to contact you when we have a question or concern on the web site…….NOT! You don’t want to hear from the artists and fans about your stupidity in shutting down Pandora.
Remember that when you outlaw the distribution of Artist X’s work only outlaws will hear Artist X’s work while Artist X doesn’t get paid.