Internet radio will live to see another day

Chris Caceres · July 7, 2009 · Short URL:

"Pureplay" agreement between webcasters and record labels will experiment with revenue sharing

 Just the other day I was hanging out with some friends, reminiscing on the music of Michael Jackson.  Outdoors and without access to my record/digital music collection, I decided to load up Pandora on my iPhone and turn on some MJ radio.  Yet the future of Online radio was under question.  Today there’s a light at the end of the once dark tunnel.   

Online radio stations have just sighed a breath of relief as an agreement between them and radio stations has taken place.

A new term titled, “pureplay” has been agreed upon under the Webcaster Settlement Act of 2009.  This agreement gives Online radio stations, like Pandora, the option of electing an alternative set of rates and terms to those issued originally by the Copyright Royalty Board in 2007.   

It’s been a two-year battle between webcasters and Record labels.

Back in 2007, SoundExchange – a government agency regulating the business behind Online radio – set rates for streaming which could have put our favorite sites like Pandora out of business.  Without the “pureplay” agreement, Pandora would have had to be paying about 0.19 cents for every song streamed on its platform next year.

The new agreement will last 10 years and allow webcasters which elect these new terms to pay artists and rights owners a minimum percentage of all their revenues of up to 25 percent, and to pay a more significant annual minimum royalty, instead of payments per individual streams.

Tim Westergren, founder of Pandora, told the NYTimes, “This is definitely the agreement that we’ve been waiting for.”

SoundExchange views the deal as “experimental.”  In the press release John Simson, executive director of SoundExhange said, “Time will tell if revenue sharing is the right move for both the recording community and webcasters…but we’re willing to take the risk in the hope that artists, rights holders and webcasters can all benefit.”

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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.

• 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


Joined Vator on is a social networking company which revolves around its music recommendation engine. Recommendations are made by comparing user data to the rest of the user community. This community gives more potential to grow into media other than music. This is most likely a reason why media giant, CBS, acquired for $280 million in May of grew from very modest funding compared to its competitors Pandora, ilike, MyStrands and others.