San Francisco – Popular online radio channel, Pandora, which allows users to choose the songs and artists they want to hear, is likely to close down soon due to a massive increase in royalties demanded by the music industry, the site’s founder Tim Westergren said.
‘We’re approaching a pull-the-plug kind of decision,’ Westergren told the Washington Post in an interview. ‘This is like a last stand for webcasting.’
The troubles faced by Pandora reflect the constant tension between music producers and internet companies, which since the advent of music sharing site Napster 10 years ago have used digital technology to distribute music without reimbursing music companies.
Pandora’s decision was prompted by the Federal Copyright Royalty Board’s decision last year to dramatically hike royalties for Web radio, acting under pressure from SoundExchange, an organization comprising representatives from record labels and performers.
The royalty increase now amounts to some 70 per cent of Pandora’s 25 million dollars in revenue, Westergren said.
‘We’re losing money as it is,’ said Westergren. ‘The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we’re doing is wasting money.’
Piehole Comment: Crap!
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