Good news for Pandora?
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I got this a while ago, but didn't read it until now. Looks like good news for Pandora. I'm not sure how this will effect broadcasting outside the US but at least the royalties are so insanely priced that they won't be driven out of business.
Inslee Update: Internet Radio Preservation
July 10, 2009
Dear Mr Dygert:
This week, after a long fight, internet radio broadcasters are finally safe from being forced to pay the impossibly high royalty rates that had threatened to destroy this new and promising media platform. This dispute has affected hundreds of thousands of Washington State residents, and millions more across the country who listen to streaming audio broadcasts on internet sites like Pandora.com and home-grown Washington broadcasters Hollow Earth Radio.
In the last few years, 40 million Americans have come to depend on the growing number of internet radio broadcasts of music and independent news programming. But until this week, an unfortunate ruling by a government panel has threatened this potentially revolutionary technology. In 2007, the Copyright Royalty Board (CRB) raised proposed music royalty rates to an impossibly high level - even higher than the rates that artists and music labels had requested. The CRB arbitrarily set the cost to play songs and other copy-written content so high that even artists and copyright holders feared it would put this potential new revenue stream out of business! Under the ruling, some small webcaster estimated royalties could cost them the equivalent of 300 percent of their revenue.
For several years, I have worked to facilitate an agreement between webcasters, copyright holders, and the CRB. For many months, a coalition of webcasters has been in negotiations with SoundExchange, the clearinghouse that represents artists and labels to collect internet music royalties from webcasters. However, the problematic ruling by the CRB had to stand until an act of Congress could overturn it. That is why, in this Congress and in the last one, I introduced the Webcaster Settlement Act and got it passed into law. The bill gave broadcasters and copyright holders the key to their own destiny, effectively allowing an agreement they reach between themselves to override the two-year-old ruling of the CRB.
Now, the Webcasters Settlement Act is working as it was designed. On Tuesday, the first three webcasting companies announced they have struck a landmark deal with SoundExchange to share a maximum of 25 percent of their total revenue in the form of royalties to artists. The deal also gives favorable rates to small webcasters like Hollow Earth and Seattle's temporarily dormant Oseao.com. Webcasters and copyright holders needed the freedom to negotiate and craft a royalty rate structure that's fair for all impacted parties. I'm happy to see that these parties have taken that opportunity granted by the Webcaster Settlement Act and reached an agreement which will benefit both sides as well as the public, who can now expect reliable webcasts as an important alternative to traditional broadcast radio.
It is a great indication of the flexibility and strength of digital commerce that copyright holders and new media professionals have come together to their mutual benefit and the benefit of internet radio users. This cacophony of unique voices and sounds strengthens our culture and civil discourse, even as independently-run traditional media outlets are on the verge of becoming endangered species. I believe strongly that Congress has a role to protect and promote media diversity, including local radio broadcasting as well as web-based broadcasting.
Replies
Hi, it’s Tim -
I hope this email finds you enjoying a great summer filled with music from Pandora.
I’m writing with some important news. Please forgive the lengthy email; it requires some explaining.
First, I want to let you know that we’ve reached a resolution to the calamitous Internet radio royalty ruling of 2007. After more than two precarious years, we are finally on safe ground with a long-term agreement for survivable royalty rates – thanks to the extraordinary efforts of our listeners who voiced an absolute avalanche of support for us on Capitol Hill. We are deeply thankful.
While we did the best we could to lower the rates, we are going to have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the web. Because we have to pay royalty fees per song and per listener, it makes very heavy listeners hard to support on advertising alone. Most listeners will never hit this cap, but it seems that you might.
We hate the idea of capping anyone's usage, so we've been working to devise an alternative for listeners like you. We've come up with two solutions and we hope that one of them will work for you:
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Your first option is to continue listening just as you have been and, if and when you reach the 40 hour limit in a given month, to pay $0.99 for an unlimited number of hours for the rest of that month. This isn't a subscription. We'll charge your credit card for just that one month and you'll be able to keep listening as much as you'd like for the remainder of the month. We hope this is relatively painless and affordable - the same price as a single song download.
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Your second option is to upgrade to our premium version called Pandora One. Pandora One costs $36 per year. In addition to unlimited monthly listening and no advertising, Pandora One offers very high quality 192 Kbps streams, an elegant desktop application that eliminates the need for a browser, personalized skins for the Pandora player, and a number of other features: http://www.pandora.com/pandora_one.
If neither of these options works for you, I hope you'll keep listening to the free version - 40 hours each month will go a long way, especially if you're really careful about hitting pause when you’re not listening. We’ll be sure to let you know if you start getting close to the limit, and we’ve created a counter you can access to see how many hours you’ve already used each month.
We’ll be implementing this change starting this month (July), I’d welcome your feedback and suggestions. The combination of our usage patterns and the "per song per listener" royalty cost creates a financial reality that we can't ignore...but we very much want you to continue listening for years to come.
Please don't hesitate to email me back with your thoughts.
Sincerely,
Tim
Founder
I never experienced this with LastFM. I'm not attempting to start a internet music war. I'm just curious if this ruling is in fact going to change this to now that my time will be limited per month. In which case, how is this a win?
That being said....I got this email too, and it makes me a little sad because I use Pandora A LOT and now I may have to pay for that a little. However, the terms seem very reasonable...and i'll gladly comply if and when I do hit my limit. Pandora is a great service, so I don't mind supporting them a bit.
As a byproduct, Pandora is now asking its heaviest users (the small amount of people who use drastically more resources) to pay 99 cents per month if they wish to listen more than 40 hours/month. Honestly a dollar is extremely reasonable, in my opinion. I'm just glad Pandora's still around.
I might give LastFM a shot. The last time I did it was kind of unintuitive to navigate and hard to set up groups of music. Might just need to read up on it, but then I shouldn't have to... a buck a month isn't that bad for ease of use.