Feeds

Pandora prepares to join titsup.com club

Web radio outfit struggling to cover royalties

Top three mobile application threats

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. ®

Build a business case: developing custom apps

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
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.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.