Higher Internet radio royalties are a real threat to the existence of Pandora.
So says Tim Westergren. During the recent Senate committee hearing about the future of radio, the founder of Pandora Media testified on behalf of the Digital Media Association. He argued his case against the Copyright Royalty Board’s increased rates.
As reported by Pro Sound News, Westergren’s testimony “noted the threat to the continued existence of Pandora, and the Internet radio industry as a whole, by the 30 percent increase in sound recording royalties.” He said the rate effectively requires Internet radio services to pay royalties equaling 50 to 300 percent of revenue.
Pandora, he said, paid more than $2 million in royalties to artists and recording companies in 2006. At the old rate, the company was on track to pay over $4 million this year; instead, he stated, “Our royalty in 2007 is now likely to reach over $6 million, almost 50 percent of our total revenue. And per listener per track royalty rates for Internet radio are scheduled to climb an additional 27 percent in 2008, and 29 percent more in 2009.”
In contrast, broadcast radio pays zero sound recording royalties, satellite radio less than 3 percent of revenue and cable radio 7.25 percent of revenue, he said.
