Net Radio Reaches Royalty Deal
Don’t trash your Livio Radio just yet, Pandora is here to stay!
After two rough years of negotiations, and rumors that royalty fees would send internet radio to a miry grave, SoundExchange reports that they have reached an agreement on streaming-music royalty rates.
As it breaks down, larger ad-supported sites like Pandora will either need to share 25 percent of their revenue with the music industry, or fork over 0.08 cents ($0.0008) per play. That rate will gradually increase, and cap off at 0.14 cents ($0.0014) per play in 2015. The kicker is that the rate is retroactive to 2006. So while Pandora will have a big check to write, it’s a much better alternative to completely tanking.
The new structure affords for smaller sites to break into the market too. If a site generates less than $1.25 million in revenue per year, they only have to pay 12-14 percent for rights to stream music. Once they cross that $1.25 million threshold, the rate jumps to 25 percent (or the per play rates stated above), but by then, hopefully the company would be large enough to sustain the rates.
I like this deal. It seems like a good compromise. The 19 cents per play that the Copyright Royalty Board was initially asking for would have potentially done irreparable damage to web streaming sites, and prevented new sites from starting up due to the crippling start up rates. The new structure offers a manageable rate where both parties can survive.
With the ever-expanding availability of wi-fi, a deal needed to be reached soon, as net radio is sure to replace terrestrial radio soon enough. This deal is a step in ensuring that we plan for longevity with streaming music.
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3 Responses to “Net Radio Reaches Royalty Deal”
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Here's a follow up from Pandora's blog:
http://blog.pandora.com/pandora/archives/2009/07/…
"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)."
That seems easy enough. A dollar is more than reasonable for the services they provide, especially being that it's a non-committed dollar. You only spend it if you hit your 40-hour threshold. That means that you won't pay more than $12 a year for unlimited listening on Pandora. We pay anywhere between $5-$25 per MONTH for movies from NetFlix or Blockbuster, so $12 per YEAR seems quite fair, if not cheap.
Your thoughts?
[...] you missed the article on the new net royalties deal, you can find it here, as well as read the Pandora blog post I mentioned down in the followup section to that article, or [...]