Pandora Opens Up Over Music Royalty Rates
June 13, 2008 at 5:19 AM (PT)
Internet radio start-up PANDORA and the major music labels continue to bang heads over how much Webcasters should pay to stream tunes online -- more than a year after the issue was supposedly settled in arbitration, reports THE NEW YORK POST. In the latest sign of escalating tensions, PANDORA has hired WASHINGTON D.C.-based lobbying firm PARRY, ROMANI, DECONCINI & SYMMS in a bid to gain traction on CAPITOL HILL. The goal is to push a a proposed bill that would nullify industry Webcasting rates set last spring by the COPYRIGHT ROYALTY BOARD.
"What we want more than anything is a resolution to this negotiation which has been going on for more than a year now," said PANDORA founder TIM WESTERGREN.
The CRB, a government panel that decides online and satellite radio rates, ruled after two years of hearings that Internet radio companies must pay a scaling rate that starts at 0.0008 cents per song play, retroactively dating back to 2006. The rate will top at 0.0019 cents in 2010.
Some online radio operators have cried foul, claiming that the rate is too high and will force them out of business. PANDORA, which projects it will generate $25 million in revenue this year from a base of 13 million registered users, estimates that it would owe $18 million in fees to the recording industry under 2008 rates.
CBS's $280 million acquisition of online radio and social networking hybrid LAST.FM a year ago continues to loom large in the minds of record execs, who fume over the notion of start-ups flipping their businesses for big bucks off the back of their content.