Feeds

Pandora prepares to join titsup.com club

Web radio outfit struggling to cover royalties

The essential guide to IT transformation

This weekend saw a cry for help from personalised web radio outfit Pandora. It blubbed that music industry royalties are too high for it to survive on meagre web 2.0 advertising revenues.

In a Washington Post confessional, the firm's founder and CEO Tim Westergren said: "We're approaching a pull-the-plug kind of decision. This is like a last stand for webcasting."

The fees Pandora must pay collecting societies for creating and streaming custom radio stations will swallow 70 per cent of its projected $25m advertising revenues.

Westergren blames the decision of the Library of Congress' Copyright Royalty Board last year to set rates for custom services such as his - which effectively offer a virtual jukebox - significantly higher than traditional or satellite broadcasting. The Board decided to raise royalties for webcasts from eight one-hundredths of a cent to 19 one-hundredths of a cent per song by 2010.

Switch-off in the US would mark a dismal end to a rapid worldwide retreat by Pandora. In July 2007 it went dark in all non-US and UK territories after failing to reach payment agreements with collecting societies. That was swiftly followed in January by a pull-out from the UK, again citing royalty woes.

Unlike its Blighty-based rival Last.fm, Pandora's venture capitalist backers have yet to see a return on their repeated investments with a big media buyout. Last.fm was swallowed by the CBS conglomerate for $280m last year. Although it has its own licensing problems, the credibility and long-term stability of its sugar daddy has helped the site prosper.

Pandora's failure to attract a similar cash-rich buyer now seems terminal, despite its popularity with users. Attempts are being made to win a stay of execution by renegotiating the royalty rate, but Westergren seems resigned. "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 its headed towards a solution, we're done."

Pandora is by no means alone in its inability to profit from "free" content. Even Google, the undisputed champ of web advertising, runs YouTube as a loss leader; a net cost useful only for attracting search traffic. ®

Gartner critical capabilities for enterprise endpoint backup

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Netflix swallows yet another bitter pill, inks peering deal with TWC
Net neutrality crusader once again pays up for priority access
Judge nixes HP deal for director amnesty after $8.8bn Autonomy snafu
Lawyers will have to earn their keep the hard way, says court
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Top 10 endpoint backup mistakes
Avoid the ten endpoint backup mistakes to ensure that your critical corporate data is protected and end user productivity is improved.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Backing up distributed data
Eliminating the redundant use of bandwidth and storage capacity and application consolidation in the modern data center.
The essential guide to IT transformation
ServiceNow discusses three IT transformations that can help CIOs automate IT services to transform IT and the enterprise
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.