Pandora’s Woes: RIAA Would Rather Artists Make Nothing
As traffic to Pandora continues to climb at an impressive rate, far more steep than that of competitor Last.fm as seen in the chart above, the popular custom internet radio provider may be a breath away from closing its doors. Why, you might ask? The answer is not very far from being obvious these days. Wherever there is an emerging revolution in the realm of music consumption, loved by many yet still on the brink of defeat; the RIAA is never far from the scene. Pandora’s current woes fit the mold precisely. Pandora usage is at all all-time high and usage increased by almost two million visits per month from June to July alone, yet elevated royalty rates are making it nearly impossible for the company to stay afloat. After last year’s decision that internet radio provider per-song royalty rates would double there has been an ongoing battle between providers and SoundExchange, an unincorporated division of the RIAA tasked with collecting royalties from digital providers such as satellite and internet radio. The decision determined that the rate would increase incrementally from .08¢ per song per listener in 2006 to .19¢ per song per listener by 2010. While tiny fractions of a penny seem insignificant, they add up quickly. Pandora projects that it will pay out about $17 million this year, or a staggering 70% of its revenue, in royalties. Long story short, it is losing money. The problem is even worse for smaller internet radio providers, where increased royalty rates are expected to amount to between 100% and 300% of annual revenues. Translation: By way of SoundExchange and lawmaker support, the RIAA would rather wipe internet radio off the map with outrageous royalty rates than find a fair way to make some money for its clients (labels and, theoretically, musicians). Why is that? There is no way for us to say but as per-song performance royalties are positioned to wipe internet radio off the map, it should be noted that terrestrial radio pays no such fees.
Tim Westergren, Founder of Pandora, had this to say to the Washington Post:
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.
This sucks. Pandora is awesome. There has also been a increase in traffic due to the iphone. Anyone notice that Pandora was in the top 5 free applications since the iphone 3g was released? I see a music strike coming!
I’m going to guess that the sharp increase in users is directly related to the release of the iphone! I never used pandora until I bought my iphone, now it is in constant heavy usage…at home, the gym, and in the car…I even canceled my XM radio subscription…
Yep – spike was directly due to iPhone app. Visits were already increasing steadily each month prior to the iPhone app though. Pandora would have/should have had a bright future…
I’ve heard of it before, but only started using it regularly on my ipod touch. How does pandora make money off iphone/touch users? Best free service.
That’s it I am boycotting buying any more CD’s! Oh wait, have not bought one in 3 years already!
That’s it I am keeping up my boycotting of buying new CDs!!!!
Pandora may or may not be the best thing to happen to the music industry in the last decade or so, but the RIAA is certainly the worst. Ever.
I hate the RIAA… they are f-ing stupid. Pandora gives you both amazon and itunes outlet links to let you purchase the songs if you like them enough. I have even done that for bands I found and in turn liked. It’s free advertising for bands. God, stuff like this drives me nuts….
couldn’t they move overseas? RIAA is ruining the American music industry, so move it somewhere else.
” RIAA is ruining the American music industry, so move it somewhere else.”
No, the worthless RIAA ruined music long ago.
same thing with the mpaa an left wingers in hollywood
the riaa an the record companies ruined it for everybody. causse the record lables don’t wan’t to adapt and chang their failed business model.
we know the bads themselves only make money form concert tours.
whe the riaa claims they are doing it for the artist they are doing it for the record lables aka th copyright holders.
Sony BMG is stil having labor disputes.
with the advent of the web and cd burners an media file formats
the media studios are nothing more than a trumped up marketing firm.
In order for the riaa to colaplase their scorce of funding the record lables Need to colapse
Does no-one know how to spell any more?
fuck the RIAA. What bunch of fucking assholes
So sad that something that I’ve been using for at least 18 months might be dying because the RIAA wants to be a huge asshole.
@ detest if moved over seas it would be alot worse as brittans trying to get copyrights to last over half a centurey BTW the ameriody to blame but themselves.music industry created the RIAA. the musci industry has novody to blame but themselves for for failing to change and adapt their busnes model for the last 38 years.
the record lables shouldn’t even exist anymore. because their reason for being is avalable at the consumer level for the most part.
I wait for the day when the music industry finally dies.
And music again becomes something other than the exploited, abused artform it is today.
It should never be about cash.
That being said – Where the fuck is my RIAA print toilet paper?… I seem to have run out.
I said it before and I will say it again. I’m done buying RIAA music and will pay double for my music via import bands not on RIAA labels.
No more RIAA or IRA for me.
Sung with an Irish accent -
Does Your Mother Come From Ireland, Does Your Granny Ride A Bike?
decent article…even if biased.
regular radio DOES pay royalties.. a yearly fee to performing rights organizations (ascap, bmi, sesac). they don’t get off scott-free.
as a professional songwriter (my lights stay on because of royalties) i agree with pandora having to pay to keep going.
contrary to popular belief, music isn’t free and if you take away the money making aspect you’ll be stuck with even crappier music than is out there now.
i dont want pandora to go out of business… but I wont cry for them if it means artists don’t get paid.
gener1c@hotmail.com