I just received a troubling message, sent by Pandora CEO Tim Westergren to the Pandora user community, about the fact that the Copyright Royalty Board has just dramatically increased the fees Internet radio sites must pay to the record labels.
If this is left unchanged, the resulting financial burden would effectively stymie -- and potentially kill off -- all Internet radio sites, including Pandora.
According to Tim, "The RIAA has convinced the Copyright Royalty Board federal committee to pass rates that will kill internet radio. For now, we are continuing to operate Pandora in the belief that rationality will return."
"Online radio has brought millions of music-lovers back into music radio, and has opened up a world of opportunity and promotion for thousands of musicians - both obscure and well known. Pandora is already paying millions of dollars annually in licensing fees (fees not paid by traditional radio stations), and while we are striving hard to build a sustainable business, we have yet to make a profit--even at the old rates."
There is a congressional hearing on this matter taking place tomorrow afternoon in Washington, DC., so we'll see if anything reasonable transpires. Also, here's a link to a review of the situation by an attorney dealing with the issue.