After years of wrangling and imminent doom constantly hanging over their heads, Pandora and other webcasters like AOL Radio have finally managed to work out a new deal with the music industry that should ensure the survival of their businesses for the next few years. Under this deal, large webcasters with revenue over $1.25 million will pay the greater of 25% of their revenue, or a fixed price per song, which will increase from 0.08 cents to 0.14 cents in 2015. Services with less than $1.25 million in revenue will have to pay 12 to 14% of their revenue.
Earlier this year, SoundExchange, the non-profit performance rights organization charged with collecting royalties from satellite and Internet radio stations, was trying to get webcasters to pay 0.19 cents per song, a price that few businesses were able to pay and which could have meant the end of services like Pandora.
As the New York Times reports, John Simson, the executive director of SoundExchange, still argues that the original rates would have been “appropriate and fair,” but he admits that these new rates will give “webcasters the opportunity to flesh out various business models and the creators of music the opportunity to share in the success their recordings generate.”
Tim Westgren, Pandora’s founder, points out that this is not an ideal solution, but that this deal “still represents a thoughtful and reasoned outcome under the circumstances.”
Some Changes for Pandora
At least for Pandora, however, this will also mean that a small number of users who stream more than 40 hours of music per month will have to pay 0.99$ if they want to hear more music on Pandora during that month. Pandora says this will only affect about 10% of its user base and those users, of course, could also upgrade to Pandora’s desktop player, Pandora One.
