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Pandora wings clipped (a bit) as Internet radio royalties decided
July 7, 2009 |
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Fear not, Pandora lovers -- reports of the imminent death-by-fees of Internet radio stations have been greatly exaggerated.Internet radio stations, such as the popular Pandora, on Tuesday reached a deal with music copyright holders, coming to terms on a new royalty fee structure. Although the royalty rates will significantly limit the amount of free content Pandora and other large stations like it can provide, the deal brings closure to a two-year struggle over how music copyright holders should be compensated for works being broadcast over Internet radio stations."The royalty crisis is over. Pandora is finally on safe ground with a long-term agreement for survivable royalty rates," wrote Tim Westergren, Pandora's founder, in a Tuesday blog post. "This ensures that Pandora will continue streaming music for many years to come."The argument over Internet radio royalty fees goes back to March 2007, when the Copyright Royalty Board first stated that all Webcasters needed to pay a royalty fee of 19 cents every time they played a copyrighted song. Webcasters such as Pandora suggested that that type of fee scheduling would be crippling to their business, which depends mostly on online advertising for revenue.The Webcasters Settlement Act of 2008 originally mandated that a decision on royalties be reached by Feb. 15, 2009, and a follow-up bill, the Webcasters Settlement Act of 2009, extended the deadline through July.Under the new agreement -- according to Westergren's blog post and SoundExchange -- the royalty fee structure is prorated based on an Internet radio station's size and business model, and covers the period of 2006 through 2015.
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