Pandora: RIP?

Most online radio-streaming fans have been glued to their PCs in hopes that news would come that Pandora would be safe, but according to several news sites such as DailyTech.com, it looks like Pandora may be finished. Due to a high increase in royalty rates by SoundExchange “who enforce and collect payments, respectively, on behalf of song owners for public performances of their music.”

The hope that still remains is due to the US Congress getting into the negotiation to effectively reduce the increased rates that Pandora is claiming will knock them out of business. However, according to DailyTech this morning, Congressman Howard L. Berman (California) “spent the last week attempting to work out a deal last-minute between SoundExchange and companies like Pandora, but that an accord – if it is even possible – is still a long ways off.” Now, it seems, Pandora has no way to win but to go out of the music-streaming business.

Millions of users use Pandora’s online radio to listen to their favorite music while at work and while surfing the web. Pandora founder, Tim Westergren, interviewed with DailyTech.com over a year ago with the fear that if the rates don’t increase, his company would go bankrupt. “If you increase your rates, and if it puts those rate-paying stations out of business, then you’re going to get nothing. These rates essentially don’t rely on the understanding of the economics of web radio,” he stated.

The biggest controversy at hand is neither the satellite radio or the terrestrial radio stations have to pay the same royalties as webcasters. Terrestrial radio stations actually don’t have to pay a cent for royalties, which is causing a lot of controversy with web radio fans.