Pandora Agrees to New Royalty Plan That Charges Heavy Listeners, Live365 Responds
Depending on who you ask, Pandora's agreement to reconfigure their business plan based on an increase in royalty rates is either a shrewd business movie, or the first toll of the death knell for internet radio. Pandora has emerged from the royalties battle standing, but shaken.
Heavy listeners who want to keep on using Pandora are going to have to pick one of two pay-to-play pricing plans. If you listen to more than 40 hours of music a month on Pandora, you'll have to put 99 cents in a digital tip jar for unlimited listening for the rest of the month. It's not a subscription, and if you pay by credit card you'll only be charged for that month. The second option is to upgrade to their new premium service, Pandora One, for $36 a year. Pandora One will aim to lure frequent customers and audiophiles in with a high-quality 192kbps music stream, exclusive desktop application to run Pandora, no advertising, unlimited monthly listens, and an assortment of other goodies.
Of course, as some have pointed out, what's at issue here is the royalties increase itself, not necessarily Pandora's decision to change their business model. The big players like Pandora and Last.fm can afford the 25% royalties rate on their revenue, and it even looks somewhat attractive since without the compromise they'd likely be forking over almost all of their profits. The plan is going to hurt smaller broadcasters, who now, in addition to the royalties hike, have to pay a "proxy fee" in lieu of record-keeping they likely won't be able to manage.
Live365 (the folks who host Paste's online radio station) is no stranger to the thousands of smaller broadcasters they host on their service. The company sent Paste a statement via e-mail about the proposed rate increase, intimating it will be offering a counter-proposal royalties plan:
"Live365 believes these smallest of webcasters, micro-webcasters, should have the same benefits as the major players have secured. However, certain hurdles built into current deals end up costing these webcasters the highest rates. As an example, today's reduced rates for a 'small' pureplay webcaster requires a $25,000 upfront payment, [which is] more than these micro-webcasters can earn with their limited hours. The previous SX microcaster offer was actually the same rates as full CRB rates. The unintended effect of these high hurdles on tens of thousands of small webcasters is an increase in piracy as it's easier to just go around the rules, with SoundExchange having little or nothing to do with enforcement. How did you get your music before Apple came up with a 99 cent legal download?
Therefore, in support of this beneficial class of micro-webcasters, reducing piracy and increasing royalties, with a low hurdle, legal alternative, Live365 has submitted to SoundExchange a rate proposal for consideration. It not only provides these webcasters the same reduced rates others benefit from, but leverages webcasting service aggregators like Live365 and others to assist SoundExchance with the administration, royalty collection and payment, full census reporting and compliance for tens of thousands of these tiny stations."
No word yet on how this is going to play out, but stay tuned.
Related links:
"Live365 believes these smallest of webcasters, micro-webcasters, should have the same benefits as the major players have secured. However, certain hurdles built into current deals end up costing these webcasters the highest rates. As an example, today's reduced rates for a 'small' pureplay webcaster requires a $25,000 upfront payment, [which is] more than these micro-webcasters can earn with their limited hours. The previous SX microcaster offer was actually the same rates as full CRB rates. The unintended effect of these high hurdles on tens of thousands of small webcasters is an increase in piracy as it's easier to just go around the rules, with SoundExchange having little or nothing to do with enforcement. How did you get your music before Apple came up with a 99 cent legal download?
Therefore, in support of this beneficial class of micro-webcasters, reducing piracy and increasing royalties, with a low hurdle, legal alternative, Live365 has submitted to SoundExchange a rate proposal for consideration. It not only provides these webcasters the same reduced rates others benefit from, but leverages webcasting service aggregators like Live365 and others to assist SoundExchance with the administration, royalty collection and payment, full census reporting and compliance for tens of thousands of these tiny stations."
No word yet on how this is going to play out, but stay tuned.
Related links:
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