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)

Comments

  1. Jake
    September 24, 2009 at 12:48pm
    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. sam
    September 28, 2009 at 6:58pm
    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. sam
    September 28, 2009 at 7:02pm
    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. scott
    September 29, 2009 at 8:45am
    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. O/Siris
    October 09, 2009 at 6:11am
    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.
  6. Cornelius
    November 02, 2009 at 5:41pm
    I read a few topics. I respect your work and added blog to favorites.
  7. KAS
    November 03, 2009 at 10:18pm
    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.
  8. John
    November 04, 2009 at 4:57pm
    Thank you! You often write very interesting articles. You improved my mood.
  9. r4 revolution for ds
    November 04, 2009 at 8:44pm
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  10. hotspot shield
    November 06, 2009 at 1:54am
    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."

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