Pandora attacks regular radio for paying less

Ronny Kerr · July 14, 2009 · Short URL: https://vator.tv/n/95d

Newest ally of recording industry aims to erase double standards in radio

Why should old-school radio only have to pay songwriters, while I get footed a tremendous bill for songwriters, performers, and record labels?

So complains Pandora, the newest friend of the record industry in the fight to start making radio stations pay for the songs they play. Reported first by Ars Technica, Pandora founder Tim Westergren sent followers of the online radio service an email expressing unhappiness with the current discrimination.

Westergren wasn’t just looking for pity points either. He encouraged those he emailed to take action by contacting House Majority Leader Nancy Pelosi about the “fundamentally unfair” fact that Internet radio pays higher royalties than traditional radio.

Interestingly, this latest news comes a week after Pandora made headlines for two separate though equally significant announcements.

Firstly, on July 7, webcasters and record labels reached a landmark agreement in the increasingly tense conflict over how the latter would receive the earnings it felt entitled to, while leaving the former enough to not only survive but to thrive. Under the Webcaster Settlement Act of 2009, online stations will be charged percentages of their actual revenues, instead of just flat rates for every song played. Small broadcasters and big broadcasters, like Pandora, appear to be equally pleased about the results.

Then a few days later, on July 10, it was revealed that Pandora was closing a new financing round, estimated by peHUB at around $35 million.

Though traditional radio’s excuse for having minimal radio fees has often been that it is an excellent source of spreading the word on new music too many people, this cannot be accepted too easily these days, as the Internet increasingly becomes the number one spot for finding new music.

With Pandora drawing so much money from investors, we would be silly to wonder who’s going to be one of the biggest contenders in music promotion for the next few years. Therefore, Pandora probably has a point. Maybe they should be playing even less than commercial radio.

Ronny Kerr

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Pandora

Startup/Business

Joined Vator on February 21, 2008

Pandora, the leading internet radio service, gives people music they love
anytime, anywhere, through a wide variety of connected devices: laptop and
desktop computers, smartphones, connected BluRay players, connected TVs,
etc. Personalized stations launch instantly with the input of a single “seed” –
a favorite artist, song or genre. The Music Genome Project®, a deeply
detailed, hand-built musical taxonomy, powers the personalization or
Pandora. Using this musicological “DNA” and constant listener feedback
Pandora crafts personalized stations from the more than 800,000 songs that
have been analyzed since the project began in January 2000.
More than 75 million people throughout the United States listen to
personalized radio stations for free on Pandora through their PCs, mobile
phones and devices such as the iPad, and connected in-house devices
ranging from TVs to set-top boxes to Blu-Ray players. Mobile technology has
been a significant factor in the growth and popularity of Pandora, starting
with the introduction of the Apple app store for the iPhone in the summer of
2008. Pandora instantly became one of the most top downloaded apps and
today, according to Nielsen, is one of the top five most popular apps across
all smartphone platforms.

Pandora is free, simple and, thanks to connectivity, available everywhere
consumers are – at the office, at home, in the car and all points in between.
In 2009 the Company announced that Pandora would be incorporated into
the dashboard in Ford cars via SYNC technology; GM has already followed in
announcing plans to integrate Pandora into its vehicles and Mercedes-Benz
introduced their Media Interface Plus device that works with the
free Pandora iPhone app to provide direct control of Pandora from in-dash
stereo controls. This was all great news for the millions of Pandora listeners
who had been plugging their smartphones into car dashboards to listen to
personalized stations while driving. More than 50 percent of radio listening
happens in the car, making it a crucial arena for Pandora.

Today tens of millions of people have a deeply personal connection with
Pandora based on the delight of personalized radio listening and discovery.
These highly engaged listeners reinforce the value Pandora provides to: 1)
musicians, who have found in Pandora a level playing field on which their
music has a greater chance of being played than ever before; 2) advertisers,
who benefit from the multi-platform reach of Pandora, as well as its best
practices in targeting consumers for specific campaigns; 3) the music
industry, which has found in Pandora a highly effective distribution channel;
and 4) automobile and consumer electronics device manufacturers, who have
noted that incorporating Pandora into their product makes it more valuable
to consumers.

Pandora continues to focus on its business in the United States. The radio
arena has never been hotter, thanks to technology that enables radio to be
personalized to the individual and more accessible than ever before. Right
now millions of people listen to Pandora in the United States and we hope
someday to bring Pandora to billions of people around the world.

Timeline:
• 2000 – Tim Westergren’s Music Genome Project begins.
• 2005 – Pandora launches on the web.
• 2008 – Pandora app becomes one of the most consistently downloaded
apps in the Apple store.
• 2009 – Ford announces Pandora will be incorporated into car
dashboard. Alpine and Pioneer begin selling aftermarket radios that
connect to consumers’ iPhones and puts the control and command of
Pandora into the car dashboard.
• 2010 – Pandora is present on more than 200 connected consumer
electronics devices ranging from smartphones to TVs to set-top boxes
to Blu-ray players and is able to stream visual, audio, and interactive
advertising to computers, smartphones, iPads, and in-home connected
devices.