Kurt Hanson of the RAIN newsletter is reporting today that a popular Internet radio station may be forced to shut down due to increased royalties.
“We’re approaching a pull-the-plug kind of decision,” Pandora founder Tim Westergren told The Washington Post, “This is like a last stand for webcasting.”
Citing the high royalty rate, which will eat 70% of the Internet radio station’s yearly revenue, Westergren revealed that Pandora may have to shut down “because all we’re doing is wasting money.”
Additionally, California Congressman Howard Berman (D), the article reveals, is mediating talks between the sides. However, Berman expressed his frustration to the paper, stating, “If it doesn’t get much more dramatic quickly, I will extricate myself from the process.”
Kurt Hanson, in his analysis of the developments, argues that SoundExchange will not relent its claim to such high royalty rates, “even if it’s, in the long run, against their own interests.”
This is exactly what SoundExchange’s Executive Director John Simson envisioned, “less completion, more control.” It would be a complete tragedy should Pandora succeed in shutting down.
It’s a reality that our Internet radio station faces everyday.