Pandora forced to charge due to royalties

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: July 07, 2009 Blog : Important update on royalties : For more than two years now I have been eagerly anticipating the day when I could finally write these words: the royalty crisis is over! : Webcasters, artists, and record labels have reached a resolution to the calamitous Internet radio royalty ruling of 2007. Pandora is finally on safe ground with a long-term agreement for survivable royalty rates. This ensures that Pandora will continue streaming music for many years to come! : Many people played a role in getting here. Pandora listeners provided support in extraordinary numbers in Congress, and a group of reasonable and constructive voices on the label and artist side of the table (groups like A2iM) helped forge a middle ground that, while perhaps not meeting all of our aspirations, still represents a thoughtful and reasoned outcome under the circumstances. : For this we are truly thankful and want to express our deepest gratitude to everyone involved. : The revised royalties are quite high - higher in fact than any other form of radio. As a consequence, we will have to make an adjustment that will affect about 10% of our users who are our heaviest listeners. Specifically, we are going to begin limiting listening to 40 hours per month on the free version of Pandora. In any given month, a listener who hits this limit can then opt for unlimited listening for the remainder of that month for just $0.99. 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. We hope this is relatively painless and affordable--the same price as a single song download. (Alternatively, they can upgrade to "Pandora One", our premium version which offers unlimited monthly listening in addition to its other benefits). : We hate the idea of limiting anyone's listening, but we have no choice but to react the economic realities of the new rates. : There continues to be royalty-related activity in Washington DC. On the heels of the above resolution, there is a new effort in Congress to fix the broader issue of how musical artists are compensated across all forms of radio. The system as it stands today remains fundamentally unfair both to Internet radio services like Pandora, which pay higher royalties than other forms of radio, and to musical artists, who receive no compensation at all when their music is played on AM/FM radio. We, along with the artists whose music we play, strongly support the establishment of a level playing field, a truly fair system, as articulated in a new bill called the Performance Rights Act (H.R. 848). : It has been an extraordinary couple of years. Believe me, I never thought I'd be donning a suit and tie to walk the halls of Congress lobbying for a bill. Thanks to all of you for your continued support. It is incredibly exciting for everyone at Pandora to see the vision for the company truly beginning to take shape. We are all looking ahead with renewed vigor to the future. : Cheers. : Tim (Founder)

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