Important update on royalties

July 7th, 2009 by in Uncategorized

For more than two years now I have been eagerly anticipating the day when I could finally write these words: the royalty crisis is over!
Webcasters, artists, and record labels have reached a resolution to the calamitous Internet radio royalty ruling of 2007. Pandora is finally on safe ground with a long-term agreement for survivable royalty rates. This ensures that Pandora will continue streaming music for many years to come!
Many people played a role in getting here. Pandora listeners provided support in extraordinary numbers in Congress, and a group of reasonable and constructive voices on the label and artist side of the table (groups like A2iM) helped forge a middle ground that, while perhaps not meeting all of our aspirations, still represents a thoughtful and reasoned outcome under the circumstances.
For this we are truly thankful and want to express our deepest gratitude to everyone involved.
The revised royalties are quite high – higher in fact than any other form of radio. As a consequence, we will have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the free version of Pandora. In any given month, a listener who hits this limit can then opt for unlimited listening for the remainder of that month for just $0.99. In essence, we’re asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours. We hope this is relatively painless and affordable–the same price as a single song download. (Alternatively, they can upgrade to “Pandora One”, our premium version which offers unlimited monthly listening in addition to its other benefits).
We hate the idea of limiting anyone’s listening, but we have no choice but to react the economic realities of the new rates.
There continues to be royalty-related activity in Washington DC. On the heels of the above resolution, there is a new effort in Congress to fix the broader issue of how musical artists are compensated across all forms of radio. The system as it stands today remains fundamentally unfair both to Internet radio services like Pandora, which pay higher royalties than other forms of radio, and to musical artists, who receive no compensation at all when their music is played on AM/FM radio. We, along with the artists whose music we play, strongly support the establishment of a level playing field, a truly fair system, as articulated in a new bill called the Performance Rights Act (H.R. 848).
It has been an extraordinary couple of years. Believe me, I never thought I’d be donning a suit and tie to walk the halls of Congress lobbying for a bill. Thanks to all of you for your continued support. It is incredibly exciting for everyone at Pandora to see the vision for the company truly beginning to take shape. We are all looking ahead with renewed vigor to the future.
Cheers.
Tim (Founder)

Pandora

The Pandora Team http://www.pandora.com/

229 thoughts on “Important update on royalties”

  1. Radio shouldn’t be excluded from the royalties. They aren’t any different from Pandora, except that they torture us with terrible mixes, horrible rap-rock fusions, heavy advertising, and annoying hosts.

  2. Good job only a few other times have I seen something so amazing and revolutionary completely lose sight(I mean literally become blinded)to what there whole program was originally about. Being established for the sake of music and promoting artist and giving people what they have never dreamed of having before. Now its an advertisment engine who by some strange situation of events can’t afford to keep itself running despite the fact that you hear and ad about every four songs, you see an ad whenever you look at the screen and every time you change the station you have to hear an ad with ever increasing play times. Now on top of that we have to fucking pay?! Great job you fucking sellouts. I was going to donate some cash to your cause but now instead of taking it as an offering to your program your basically demanding donations.You say its an economic decision but your not thinking about the people who don’t have jobs or can’t get them, I know you are not charging alot but it adds up and there are people who love your service but simply can’t afford to pay for it all the time.I knew it couldn’t last because it was about time that human nature kicked in and you stop being able to resist a chance to get even more money into the palms of your greedy little hands.
    Its like if some theater was doing a free outdoor screening of a movie(a theater near me does)and they just suddenly started telling people they have to pay even though by name, the movie is free but you still have to pay for it. I can easily say most people would leave.Im not saying most people would leave because most people would rather pay than to give up the convenience and the people that do stay and have no problem with this are the people that like to take it for face value and can afford it.

  3. I see, you hold comments for your own approval so you can censure out the people who would speak the truth about the bullshit your doing with the station. that’s very american of you, you neo-music-nazis.

  4. I am pretty upset about the 40 hours a month limit, I wouldn’t mind paying the stupid dollar but its the principle of it. You should have just added more adds to pay for the extra dollar on the 10% its effects. Why do people always want to change a good thing. This sux.

  5. It’s odd to me that people are so completely upset about this. I get that some of these people are longtime listeners, and they don’t like the change.
    Hey, guess what? Tim said in his post that he doesn’t like it either. But he’s got only one choice if he wants to stay legal: pay the royalty fee. It’s higher than before. So there’s additional pressure on him. Can ads make up the difference? I’ve been watching, and ad revenue on the Internet is DYING. Part of the problem is people choosing to block the ads. Not all, but part. While this may not be something that happens with Pandora, it has the effect of lowering the value of online ads for EVERYONE online. Do you run Adblocker in Mozilla? You’ve reduced the revenue generation from ads. Found an add-on for IE that does the same? For Safari? For Opera? For Chrome? Same results. Every time ad “hits” drop away, advertisers are less willing to pay, or demand lower rates.
    There are very valid reasons to block ads, I understand that. But that doesn’t stop the revenue from dropping. And maybe it’s not enough to cover the royalties that Pandora pays.
    The Internet wasn’t born for someone to just take what they want. It was based on SHARING. A two-way process. Our side of this, when it comes to Pandora, is to pay a pretty marginal fee.
    A few people have accused Pandora/Tim of intended to progressively raise the fee over time. If you want to quit Pandora because of what MIGHT happen, you certainly have the right, but I find that kind of paranoia does more harm than good. Tim, if it starts to happen, I DEMAND you prove to us that it’s necessary.
    But as it is now? I understands the demands of trying to keep this site running. I can support this.

  7. With the RIAA keeping an incredibly watchful eye on creations like Pandora, there is not much room for growth and creative development. Lessig states that, “intellectual property is an instrument. It sets the groundwork for a richly creative society but remains subservient to the value of creativity. The current debate has this turned around. We have become so concerned with protecting the instrument that we are losing sight of the value” (19). Again, Lessig demonstrates an understanding for a need for copyright law; however, he views the original focus of helping protect artists’ works is shifting towards keeping artists from creating new works of art that are in-tune with technological advancements. Pandora is a great example of Lessig’s argument: the idea of Pandora Radio and the Music Genome Project is revolutionary, but is severely threatened by being forced to go above and beyond in order to follow copyright law in order to keep the RIAA and other entities happy. Having a program that selects music you might like based on other artists you have been interested in is genius, and, in my mind, represents the future of music exposure for artists, especially those who are up and coming. Using Pandora has helped me find at least a dozen artists I probably would not have found otherwise because they are lesser-known groups/genres; by limiting those who can use Pandora and how often users can access Pandora would limit the exposure of bands/artists. It appears that AM/FM and Satellite radio (the past) may feel threatened by such a powerful, song-choosing online radio, which helps explain the extra restrictions that are being placed on Pandora (the creative future). Artists do not receive royalties from their songs being played on FM radio, so it seems unfair to expect that of an online radio. Theoretically, it would be easier to record a song off of the radio using a tape player than trying to find an illegal program that could “rip” songs from Pandora, especially considering the precautions Pandora has been forced to take due to RIAA regulations and years of loyalty battles.
    We are experiencing a huge shift towards having practically all music accessed online, which with the creation of Pandora Radio helps demonstrate the move towards providing what consumers want–accessibility and convenience. As humans, we are competitive by nature, which is represented by the RIAA and FM and Satellite radio companies attempting to stay competitive in an ever-growing virtual world by putting added limitations on something like Pandora. Pandora does not mix music or allow its users to rip files; it pays higher royalties than it should have to, and yet, it is still in jeopardy. New ideas should not be threatened because of a concern for how their implementation will affect the current market–especially if they are not actively violating copyright laws.

  10. I don’t think he’ll make any money in a mutual fund if he only has a few months to trade. Have him learn about earnings and trade around earnings reports, I think he’ll either hit or miss but thats a fun way to live “Go big or go home.”

  13. I will consider putting money into it when I get time, but right now I have other things I have to pay for such as…. groceries, health care needs, and other things I need. If Pandora cannot afford the project, then simply drop it altogether. And I feel bad for those not having any access to Pandora. http://www means worldwide web, not USA only access.

  15. 36 bucks is 3 dollars a month. 3 bucks is like 10 cents a day. I’d gladly drop a dime in a machine to listen to music at work all day without annoying ads. Except my upgrade shortly to paid service. Having an excuse like “Oh I have to pay for groceries” is dumb because I don’t even have income (I’m an unpaid intern) and I’m willing to shell out for this great service. It’s far better than what I used to listen to, which was clear channel’s internet radio service that always seems to have a broken stream that screws everything up.

  16. Excellent! I had not hit the limit until yesterday and didn’t really know that it was there. I think the Pandora service is excellent ans well worth the fee. When I first discovered Pandora over a year ago I told all of my friends and family, even going as far as to say, “I’d even pay for this stuff”. Sounds like exciting times for a growing company. Thanks so much!

  18. To this day I find it curious how many people sincerely believe they are entitled to access to someone else’s creative genius for free, without effort. Then bitch and go elsewhere to pout when asked to pay a dollar.
    One comment to Tim: Since when do artists not get paid for their music when it’s played on AM/FM? Does ASCAP know this? Or BMI? Where do you think the royalties paid by radio stations go?

  19. Quoth: “I also think pandora should do a prepaid skip feature, like $5 for 500/250 skips or something like that.”
    That’s an awful idea. Limited skips are “manufactured value”. Far better to have three stations and flip between them.

  20. I was actually looking around trying to figure out why Pandora isn’t running in Canada. I’ve gotten as far as the fact the Canadian royalties either won’t allow internet streaming or are too expensive? Can anyone fill me in on exactly whats going on here?

  22. I have exceeded my 40 hour limit. So basically if I want to keep listening, I need to pay the .99. I am just wondering if there are any hidden fees and if I’m going to get charged extra on my card other than the .99? Anyone have problems with this? Just wondering to if my card number would be secure? All these internet transactions scare me.

  23. @Matt — There are no hidden fees, and we will never charge you without your consent. There is no “auto-charging”. All that will happen if you reach the 40-hour limit in the future is that your service will be put on hold until the end of the month (with the option to keep listening for $0.99 for the rest of the month).

  25. If I pause Pandora, do the minutes/hours/days paused go towards my 40 hour limit? I ran out of time in 6 days!!

  26. @Christina, Jnana — The clock is stopped when the player is paused, when the “are you still listening?” message is displayed, during audio ads, and during the gaps between songs. So basically, whenever music isn’t playing, you are not accruing any time towards your 40 hours.
    Jnana, be sure you pause the player if you walk away from the computer and sign out when you’re done, if you’re using a shared computer. Otherwise, others could be listening on your account.