HOLD ON, PANDORA DIDN’T SAVE ALL INTERNET RADIO
Jared Newman
VentureBeat
July 9, 2009
All is not perfect in Internet radio land, despite earlier sighs
of relief.
Pandora may have done good by securing a long-term royalty agreement
for itself and other large-scale Web radio services, but smaller
stations could get lost in the shuffle.
That’s at least according to Johnie Floater, General Manager for
Live365, an aggregator of over 6,000 web radio stations manned by
human DJs. While much attention was given this week to an agreement
between large webcasters and SoundExchange, a royalty collection group,
Floater says the agreement isn’t satisfactory for small webcasters
whose revenues total less than $1.25 million.
At issue is the minimum $25,000 fee imposed on all webcasters, large
and small. Floater said there’s simply no way Live365’s stable of
niche Internet station operators can each pay that kind of money.
"I’m sorry but as much as I like Armenian folk [music], it’s never
going to be a million dollar business," he said. "Does that mean it
shouldn’t be on the Internet? No."
Live365 is seeking an alternative rate model and has roughly three more
weeks to negotiate one under a deadline set by the U.S. government.
Floater wants SoundExchange to instead deal with aggregators – such
as Live365, of course – that can pull these small stations together
and put up a minimum fee larger than $25,000, but smaller than the
full fee for every station in its line-up. In addition, the company
would keep records and report what the stations are playing, so the
stations themselves don’t have to. He’s okay with the other conditions
of the agreement, which allow webcasters to pay a portion of their
revenue instead of full royalty rates, up to a limit.
If a deal falls through and smaller stations are forced to pay steep
entry fees, Floater believes niche broadcasters will turn to piracy
and broadcast recordings without paying royalties.
It’s been suggested that Pandora’s deal isn’t perfect, either. Bruce
Houghton, president of the talent agency Skyline Music and editor of
the blog Hypebot, said the deal is "better than most people feared
and not as good as the webcasters had hoped."
Houghton worries that higher royalty rates are putting too much
pressure on what are essentially startup businesses. These companies
are still trying to monetize, so he was hoping the rates would be
frozen for another year or two before being raised. "We could have
debate about which is the best, fairest way to charge, but really
the biggest problem is [royalty collectors] charge too much."
Phone calls and an e-mail to Pandora were not returned on Thursday.