There is some good news and bad in the recent negotiations between record labels and internet streaming sites which bring you radio over IP.
From the AP:
The revenue-sharing deal announced Tuesday is between SoundExchange, a nonprofit that collects royalties for recording copyright owners from digital radio services, and three smaller webcasters: radioIO, Digitally Imported and AccuRadio.
The problem for internet radio was that the old rates set in March of 2007 stipulated internet radio had to pay between 0.08 and 0.19 cents per song per listener – rates that certainly would have crippled internet radio.
The new rates are as follows according to the Wall Street Journal:
Larger services earning more than $1.25 million in revenue must pay the greater of 25% of gross revenue or 0.093 cent per listener, per song. The rates rise each year until they hit 0.14 cent per listener, per song, by 2015.
Webcasters taking in less than $1.25 million per year must pay the higher of 7% of expenses, or a percentage of revenue, starting this year at 12% for the first $250,000.
Subscription services, where people pay a monthly fee to hear music online, must pay rates starting at 0.15 cent per song per subscriber this year, rising to 0.25 cent by 2015.
So what’s the bad news? If you stream more than 40 hours of music on Pandora you will have to pay 99 cents to keep listening that month. I would imagine other streaming radio sites will follow suit. Still not a terrible amount of money to pay for a superior listening experience where you can help tailor the music to your personal taste.
Personally I have been listening to Slacker a lot more than Pandora lately but both services and Flycast are great alternatives to Sirius/XM for those who are looking for music and not specific content like Howard Stern.
The bigger takeaway here is that radio will be forever changed as the future of internet radio is now more secure than at any time in the last few years. This means hardware vendors and potential partners of Internet radio stations who were on the fence can now get deeply involved in promoting internet radio through devices and service add-ons.
This victory for radio will eventually find its way to video as well and we can expect streaming internet TV with content chosen by computers and auto-skipping to be a new frontier for IP communications.
Certainly these are exciting times for media enthusiasts as well as wireless carriers who will benefit greatly from a slew of devices which capitalize on the growing popularity of Internet radio. I would imagine a hardware provider will partner with Sprint and others at some point soon to provide Internet radio and consumers will gladly pay.
Consumers continue to prove that electronics and personal entertainment are areas they will still spend on regardless of the economy.
Update: Check out Michael Robertson’s Sadly, Pandora Is Still Going Bankrupt