Skip to main content

Music Industry, Webcasters Ink New Royalties Deal

Tim Westergren, co-founder of Pandora, an internet radio company that boasts about 30 million registered users announced the agreement yesterday, detailing that webcasters, articles and record labels had reached a resolution to the "calamitous" internet radio royalty of 2007, an agreement that would have seen many companies like Pandora drown in royalties fees.

Unfortunately the new deal is not completely painless for Pandora users. Westergren went on to say that the revised royalties are still higher than any other form of radio and as a consequence of that, those who listen to Pandora for more than 40 hours a month will be asked to pay $0.99 for unlimited listening.

"In essence, we're asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours," explained Westergren.

So how much will Pandora pay in royalties now? The New York Times cites Pandora CTO Tim Conrad as saying the deal will cut minimum per-stream royalty rates for pure-play internet radio providers by 40-50 percent. Companies will pay one of two rates: either a per-stream rate that increases each year until 2015 or 25 percent of U.S. revenues, whichever is higher. Conrad explained that smaller radio providers that gross less than $1.25 million annually have a lower rate of about 12-14 percent of revenues.

Read the full story here or check out the full blog post on Pandora by clicking here.