If you’re a fan of Internet Radio or streaming music, or just a fan of Pandora (I’m a fan of all three) then you might want to heed a call from Pandora for some help. Pandora (and other companies that fall into this category) find themselves caught in a real squeeze play and, of course, it is all about money. Unlike terrestrial radio stations that don’t have to pay royalties on each song that they play over the air, these companies have to pay a royalty for each song and each listener for that song. That can really add up. Congress, buffeted by the RIAA and the National Association of Broadcasters, is working to pass a bill that will effectively put these companies out of business, by increasing those royalty payments to ridiculous levels.
Pandora has sounded the alarm before and is sounding it again with increased urgency. The US House of Representatives is voting on this bill today at 11am EST, due to the fact that they are still in session working on the US financial bailout. If it passes, it will go into the US Senate on Monday. Pandora is urging you to call your elected reps and let them know how you feel.
This is, in my opinion, a really twisted situation. From a competition perspective, I can understand why the NAB might want to stifle, if not kill off, its competition. I don’t agree with that but I can understand it. However, the RIAA could potentially be cutting of revenue if the bill passes, given that companies like Pandora will have to make tough decisions about going forward. Pandora’s founder, Tim Westergren, stated in August that this could lead to the end of the service. That may or may not have been hyperbole, but it highlighted the threat to the Internet Radio model. Of course the real irony here, is that the RIAA is also working to change the terrestrial radio paradigm by seeking payments there as well.
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