Is Internet Radio On Its Deathbed

I love Internet radio!  Unfortunately, it may soon be the end of it unless laws change ASAP.  In March 2007, new rates were forced on webcasters to pay for each song streamed to each user, and will steadily increase over the next few years.  It is unfortunate that Pandora may be the first Internet radio service that may be forced to go offline unless things change.  In an article from the Washington Post, Pandora claims that 70 percent of its $25 million projected revenue will go towards paying for royalties.  Furthermore, the Post also reported that:

Using listener figures from Arbitron for XM Satellite Radio, it is possible to estimate that the company will pay about 1.6 cents per hour per listener when the new rates are fully adapted in 2010. By contrast, Web radio outlets will pay 2.91 cents per hour per listener.

The result is that web radio services would be forced to pay twice as much than their satellite radio counterpart.

For the already ailing music industry, the closure of such a popular radio service will certainly not help the industry recover.  In fact, it would most likely be a major step backwards.  Pandora is music service that allows each user to customize their own collection of radio stations by suggesting a favorite band or song.  Pandora will automatically generate similar artists and songs based on the entry.  One of the greatest values of Pandora is learning about new music.  I have learned about several new artists by using Pandora.  Two artists that come mind include Kamelot and Nightwish.  Prior to using this service, I had never heard of either of these groups, but after learning about them I went out and purchased music.  Clearly, what Internet radio services provide is an alternative form of publicity that is not normally available through traditional AM/FM radio.  Online internet radio is strained by the same limitation that AM/FM radio usually has to abide by (aka stupid executives that wish to control the air waves).

The potential closure of Pandora is a direct result of what happens when bureaucrats become involved with regulating a category of business they do not fully comprehend.  I hope our wonderful government leaders will recognize their error very soon.  It is unclear what will happen, but you can bank would be an awful and disheartening outcome for Pandora to shut services off.  WIRED’s Listening Post reports that rate issues are still being resolved.  I just hope that they are resolved sooner than later.

Photo Source: Sarah Sikin

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One comment on “Is Internet Radio On Its Deathbed
  1. Enjoyed your post. We recently launched an internet radio platform called Highnote. Listeners discover new music on, and independent artists have free distribution with paid promotion opportunities. At the core is the promotional platform we’re building which is designed specifically for streaming music. Labels and independent artists get promotional exposure for their new music in the most natural way – played directly after artists that are similar. Ex: I am an artist that cites Coldplay and U2 as influences, I can get my track played into streams after users hear songs by Coldplay and U2. As an artist trying to build a fan base, I only pay for qualified traffic to my web site or MySpace page, where I sell music & merchandise directly.

    The crucial thing here for listeners is relevancy — we provide enough popular songs in streams to keep the listener engaged. And we quickly stop playing promoted music if people don’t like it (though it happens less often than you’d think, because the promotions are so targeted).

    Given your past experience as a musician, I’d love your feedback both from the artist & listener perspective. We’re at


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