Pandora.com To Shut Down?

17th August 2008 | by Gavin Riley

Pandora, the popular music radio service, which through its music genome project, allows customers to create tailor-made radio stations is reportedly on the verge of ending its operations.

Founder Tim Westergren (pictured) told the Washington Post that Pandora are “approaching a pull-the-plug kind of decision, this is like a last stand for webcasting.”

The news follows last year's court ruling in the States, ordering a doubling of the per-song performance royalty that web radio stations pay to performers and record companies.

According to the Post, Howard L. Berman, a congressman from California, is trying to broker a last-minute deal between webcasters and SoundExchange, the organisation that represents artists and record companies. The negotiations could reduce the per-song rate set by the federal panel last year. The two sides appear to be far apart, however, with Berman frustrated.

"Most of the rate issues have not been resolved," Berman said. “If it doesn't get much more dramatic quickly, I will extricate myself from the process.”

"We're losing money as it is," said Westergren, a former acoustic rocker. “The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we're doing is wasting money.”

At the beginning of this year, Westergren pulled the plug on its U.K operations, citing the record label representatives for imposing license fees that were unworkable for their business. But he gave a hint too about the struggles facing Pandora in the American market.

He said: “Lest you think this is solely an international problem, you should know that we are also fighting for our survival here in the US, in the face of a crushing increase in web radio royalty rates, which if left unchanged, would mean the end of Pandora.”

Ironically Pandora and services like Last.fm have done wonders for the music industry. Yet anytime soon, the music industry looks as though it will be responsible for decapitating one of the modern giants of web radio.

Westergren, seemingly wearied by the constant haggling over the issue, told the Post that Pandora's investors may also be impatient for an end.

"We're funded by venture capital," he said. “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.”

Comments

Micah

commented 3 months ago

Are we to believe this is down to the industry? Or is it down to a failed business model that Pandora employs. Either/or I don't see last.fm having such problems!

pandora's love child

commented 3 months ago

Micah - you talk utter garbage. For a start last.fm is based in the U.K so therefore isn't on the same payment model as Pandora. I really hope somebody can do something, cos Pandora is needed now more than ever

Kreees

commented 3 months ago

The large record companies are trying to kill open internet radio stations. Then when the market is empty there'll be plenty of SONY RADIO, or UNIVERSAL RADIO, where they push what they want you to hear.

PS - broadcast radio pays $0 in licensing fees and satellite radio (one company now that Sirius and XM are merging) pays drastically lower rates than internet radio. Why the disparity???

Ryan

commented 3 months ago

We recently launched an internet radio platform called Highnote. It's a music discovery engine (highnoteradio.com), but at the core is a business model based on a promotional platform designed specifically for streaming music. Labels and independent artists get promotional exposure for their new music in the most natural way – played directly after artists that are similar. Ex: I am an artist that cites Coldplay and U2 as influences, I can get my track played into streams after users hear songs by Coldplay and U2. As an artist trying to build a fan base, I only pay for qualified traffic to my web site or MySpace page, where I sell music & merchandise directly.

The crucial thing here is that revenue is cost-per-click based rather than cost-per-play, so a) bands/labels pay only for qualified traffic to their web sites, which they monetize directly via music & merchandise sales and b) the listener experience is optimized by setting thresholds for click-through rates.

feedback welcome, we're at http://www.highnoteradio.com