The Music Genome Project's Pandora internet music radio site has sent out a desperate plea for help in the wake of a proposed shake up of the online radio industry. The Copyright Royalty Board in the US has dramatically increased the royalty fees that internet radio sites have to pay to record labels.
Pandora founder Tim Westergren said that if this is left unchanged, it will kill off all internet radio sites, including the wildly popular Pandora music portal.
"The RIAA has convinced the Copyright Royalty Board federal committee to pass rates that will kill internet radio. For now, we are continuing to operate Pandora in the belief that rationality will return.
"Online radio has brought millions of music-lovers back into music radio, and has opened up a world of opportunity and promotion for thousands of musicians - both obscure and well known," he said.
Music for the masses
Pandora is an automatic music recommendation radio station, built by the Music Genome Project. It lets people enter the name of bands, albums and music genres that they like and will put together a playlist of songs by the associated artists, as well as a multitude of content which is considered to be similar. This service is free and supported by a limited number of advertisements.
Pandora users are able to rate the tracks so that Pandora can be as accurate as possible with its recommendations.
But this service, like other internet radio sites - of which there are tens of thousands all over the web - is under real threat by the new royalty fees.
The Copyright Royalty Board is recommending that per-track royalty fees should rise by over 100 per cent by 2010. Despite the proposed fees being only $0.0019 for every aired performance, this would be more expensive for Pandora than most internet radio sites. Every user listens to a different playlist, thus millions of songs can be listened to every day.
This could lead to bills exceeding thousands of pounds for every day the site is on air, with additional licensing fees adding to the burden.
"Pandora is already paying millions of dollars annually in licensing fees [which are not paid by traditional radio stations], and while we are striving hard to build a sustainable business, we have yet to make a profit - even at the old rates," Westergren said in an email.
There is a congressional hearing on this matter taking place this afternoon in Washington DC.