Pandora Founder: Company Faces 'Pull-the-Plug' Decision Over Performance Fees
August 18, 2008 at 5:11 AM (PT)
PANDORA founder TIM WESTERGREN tells the WASHINGTON POST that the growing Internet custom streaming company is "approaching a pull-the-plug kind of decision" over music licensing and copyright fees. "This is like a last stand for webcasting," WESTERGREN said of the company's situation in the wake of last year's doubling of per-song performance fees. "We're losing money as it is." he added. "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."
...if it doesn't feel like it's headed towards a solution, we're done.
Rep. HOWARD BERMAN (D-CA), who has been trying to broker a deal between webcasters and SOUNDEXCHANGE, told the POST that "most of the rate issues have not been resolved. If it doesn't get much more dramatic quickly, I will extricate myself from the process."
SOUNDEXCHANGE General Counsel MIKE HUPPE insisted, "Our artists and copyright owners deserve to be fairly compensated for the blood and sweat that forms the core product of these businesses." Some estimates have smaller webcasters facing fees that equate to 100% to 300% of their annual revenue, while SOUNDEXCHANGE says that the problem is that the webcasters have done too little to grow their revenue.
Under the COPYRIGHT ROYALTY BOARD formula, PANDORA would have to pay $17 million for performance fees this year, according to WESTERGREN. "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 it's headed towards a solution, we're done."