Filed under: Analysis / Opinion
Pandora may pull the plug on itself
The Washington Post is reporting that Pandora, the Internet radio station available on Mac, iPhone, and iPod touch, may be shutting down service soon.The reason is that Sound Exchange, the
What this means for all Internet radio stations is that either Congress steps in and attempts to resolve the royalty issues (not likely, considering their record on resolving any issue...), or the stations will need to start charging a subscription fee for their services. Of course, Pandora could start advertising on their site and on the iPhone app to generate some revenues, but as TechCrunch.com's Michael Arrington says, "Perhaps Pandora must be our sacrificial lamb" to focus attention on the entire issue of the recording industry, digital rights, and internet radio stations.
What's your opinion on the intenet radio royalty issue? Leave us a comment.
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Reader Comments (Page 1 of 4)
Squid7085 said 6:40PM on 8-18-2008
Honestly, I am not surprised at all. It always amazed me how they could do that for free, and its not just me, anybody I show asks "How do they get away with that?" Very very sad indeed, something used legally purely for entertainment taken down by corporate greed. Hopefully Pandora can try the cost model, $4.99 for the app, as popular as it is, it could possibly cover the cost. Oh well, best of luck to them.
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Craig said 3:54AM on 8-20-2008
With a $500 per year per channel, having your own custom station (the foundation of pandora), would cost $500 per year minimum if I understand correctly. That means no $4.99 app. Maybe they could get away with having a limited number of channels an swapping them around, but that still comes to $500*peak listeners. Assuming this, and evenly distributed load (always at peak listeners), and 1 hour of music per day per user, you get $0.086 per day ($500/365/24+$.0291) or about 2.59$ per month for an hour of music a day. About $2.07 a day to stream music 24 hours a day.
Let me know if I screwed up the math there, but it looks about right. Looks like the app would not cover the price for long.
Tomahawk said 7:56PM on 8-18-2008
I love Pandora, it is by far the best streaming music site I have found. I would gladly pay $5, $10, hell even $15 monthly if it meant that they wouldn't shut their doors. Pandora please do something I really don't want to see you go.
doug said 8:08PM on 8-18-2008
I don't mind paying more for the iphone app and paying a subscription fee for their service. It is that good.
Tim said 2:54AM on 8-19-2008
If I had an iPhone or another phone I could plug into my car's audio jack, I would pay probably up to $10 a month for a service like Pandora. It seems a great alternative to Sirius/XM, and it'd be good for when I'm out of range of my favorite radio station.
Granted, I'd go with Last.FM, just because that's the service I prefer. If they start charging $10 a month, I may go for it, since I like it so much, so long as no contracts or autopaying is involved.
brandon said 1:01PM on 8-19-2008
@craig
Doesn't the article say that pandora has to pay $500 a year for each channel? Not subscribers..
Craig said 3:59AM on 8-20-2008
@brandon
The way Pandora is run, each listener has a channel. Thus the number of channels is ether the peak listeners (what I used for my calculations), or the total user created stations (much higher) depending on the legal specifics. At least that is my understanding. This is why the fees would effect Pandora so much, but not more conventional radio setups.
Alexius said 6:46PM on 8-18-2008
Meh. I haven't ever used Pandora unfortunately because it's sadly US-only. What troubles me about all of this, however, is whether or not other services like Last.FM will be hindered by this as well, since that's an example of a service I do enjoy using to find new music.
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tmd said 7:04PM on 8-18-2008
I think last.fm is ok here, since they aren't based in the US (as far as I know - I think their in the UK, no?) and so aren't subject to US law...of course, IANAL. :D
Marc said 10:17PM on 8-18-2008
They're also owned by a huge entertainment company, which doesn't hurt.
Carlos Alberto Pinto Peixoto Bastos Santos said 10:27PM on 8-18-2008
About Last.fm, as they are owned by CBS Corporation, which between one of their assets include CBS Records, and they are UK-based, I think they are safe.
But it's really sad if Pandora goes off. Nowadays I can't enjoy it because I'm living outside US, but I used to be connected to it almost everytime I was on the computer, and thanks to them I've bought many tracks and CDs, thus giving money to the Record Labels.
dukrous said 6:47PM on 8-18-2008
I'll pay for the app. I think $5-10 is a reasonable price for the service they provide.
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yargo said 6:49PM on 8-18-2008
I would be willing to pay to support Pandora. Great app.
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Usually Named said 6:51PM on 8-18-2008
From the WaPo article:
"Last year, an obscure federal panel ordered a doubling of the per-song performance royalty that Web radio stations pay to performers and record companies."
Government isn't the solution to our problems. Government is the problem.
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JAx2000 said 6:52PM on 8-18-2008
I found so many new artists using Padora and bought CD's because of it. Big mistake to force them to shut down. If they do, I'll probably resort to random play on my existing library. :-(
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Ryan said 7:46PM on 8-18-2008
Oh like the RIAA cares about music.
:)
sean murphy said 6:52PM on 8-18-2008
NOT COOL!
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Brian said 6:54PM on 8-18-2008
I'd be willing to wager that 95% of the artists represented by the RIAA disagree with the organizations intents and actions. Why the endless litigation? It can't be cheap!
Dinosaurs will die, as will the current architecture of record companies. Stop biting the hand that feeds you!
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joshjagdfeld said 6:56PM on 8-18-2008
I hate the RIAA.
What a bunch of corrupt thugs. They promote shit-tastic music and wonder why CD sales are down.
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David Chartier said 7:05PM on 8-18-2008
While the fees that SoundExchange was able to put in place are definitely high, I can't help but agree that Pandora and its brethren could be doing more to monetize their business. We're entering an age where the "just build a great idea and figure out the money thing later" won't cut it anymore, and Pandora is probably one of the most significant services to run into this brick wall.
The idea of free music and an Internet radio station that discovers new artists for me is brilliant. I love it. But the fact is that the company didn't bother to actually make money, subsequently helping to back itself into this corner by giving everything away for free or not charging enough to make it into the black.
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