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Hold On, Pandora Didn't Save All Internet Radio

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  • Hold On, Pandora Didn't Save All Internet Radio

    HOLD ON, PANDORA DIDN'T SAVE ALL INTERNET RADIO
    Jared Newman

    VentureBeat
    July 9, 2009

    All is not perfect in Internet radio land, despite earlier sighs
    of relief.

    Pandora may have done good by securing a long-term royalty agreement
    for itself and other large-scale Web radio services, but smaller
    stations could get lost in the shuffle.

    That's at least according to Johnie Floater, General Manager for
    Live365, an aggregator of over 6,000 web radio stations manned by
    human DJs. While much attention was given this week to an agreement
    between large webcasters and SoundExchange, a royalty collection group,
    Floater says the agreement isn't satisfactory for small webcasters
    whose revenues total less than $1.25 million.

    At issue is the minimum $25,000 fee imposed on all webcasters, large
    and small. Floater said there's simply no way Live365's stable of
    niche Internet station operators can each pay that kind of money.

    "I'm sorry but as much as I like Armenian folk [music], it's never
    going to be a million dollar business," he said. "Does that mean it
    shouldn't be on the Internet? No."

    Live365 is seeking an alternative rate model and has roughly three more
    weeks to negotiate one under a deadline set by the U.S. government.

    Floater wants SoundExchange to instead deal with aggregators - such
    as Live365, of course - that can pull these small stations together
    and put up a minimum fee larger than $25,000, but smaller than the
    full fee for every station in its line-up. In addition, the company
    would keep records and report what the stations are playing, so the
    stations themselves don't have to. He's okay with the other conditions
    of the agreement, which allow webcasters to pay a portion of their
    revenue instead of full royalty rates, up to a limit.

    If a deal falls through and smaller stations are forced to pay steep
    entry fees, Floater believes niche broadcasters will turn to piracy
    and broadcast recordings without paying royalties.

    It's been suggested that Pandora's deal isn't perfect, either. Bruce
    Houghton, president of the talent agency Skyline Music and editor of
    the blog Hypebot, said the deal is "better than most people feared
    and not as good as the webcasters had hoped."

    Houghton worries that higher royalty rates are putting too much
    pressure on what are essentially startup businesses. These companies
    are still trying to monetize, so he was hoping the rates would be
    frozen for another year or two before being raised. "We could have
    debate about which is the best, fairest way to charge, but really
    the biggest problem is [royalty collectors] charge too much."

    Phone calls and an e-mail to Pandora were not returned on Thursday.
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