Internet radio made such a strong showing ten years ago that, once personal internet connections became high-speed, the mega-corporate powers that be stepped in and shut them down. The latest chapter in internet radio is something very different. Programming has gotten smarter than ever, pays all royalties as required by law, but sadly has grown too big to avoid notice, so the suits are back trying to push it offline like before. These days, however, the web is a very different place, and there was no way the old-world media guys could have seen it coming. You know, because they never see any of these things coming.
Originally, most internet radio sites paid the music royalties just like they would if they were terrestrial stations, but corporate communications lobbyists managed to quietly push through laws that required web broadcasters to pay a whole new class of fees designed exactly to shut them down. It worked, they were shut down, mostly.
That's not to say that there wasn't internet radio in the interim, just that all of it has been based overseas, and illegally operated. Instead of legitimate sites playing legitimate music, listeners have largely been reduced to listening illegally at their own risk, just to have music on their own computers.
Pandora.com came on the scene a while back with a listening system more clever, unique and able to cater to the exact tastes of listeners than anything else. You tell it what you like, it plays music the "music genome project" considers similar, and you tell it whether or not you like it, and it adjusts what will play next based on what you say you like. It's not just good, it's amazing, and I'll tell you why.
1 – Pandora pays every single artist their due royalty, and not based on a "best guess" method like ASCAP, but based on actual songs that have actually played. Royalties are cleared through Sound Exchange each month, and everybody gets paid, even if just for the song playing a time or two. Everybody from Coldplay to Gabe Dixon gets their royalties, and that's nothing you'll find even from traditional radio.
2 – Instead of the most popular stations going out across the airwaves that feature as few as a hundred (but never more than around 300), Pandora.com represents more than 39,000 performers, each hand-selected, personally reviewed, and screened for audio quality and precise musical styling.
3 – With a virtually non-existent advertising budget, Pandora has grown from nothing at all to more than 6.5 million regular listeners. That means my friend told me, I told my friends, and now I'm telling you. Just go, tell it what you like, and you won't be sorry.
4 – Although there are ads that play, they are not infuriatingly overbearing like on traditional radio. This works because operation costs are low, and stations are automated to a degree never before even imagined.
Since internet radio has found a way to survive, though not exactly be profitable, and without even the promise of profits like the terrestrial guys see, the old media guys are back at it again. It's bad enough internet radio has to pay licensing fees that terrestrial stations are exempt from, they recently moved to up the ante yet again.
So who does and does not have to pay licensing fees? Traditional, terrestrial radio stations pay no such licensing fees. Satellite radio, such as XM and Sirius, pay only 5% of revenue. Lastly, internet radio stations are asked to pay 60-70% in some cases, but up to 300% of their revenue. It's not that the business isn't affordable, it's that they are being pushed out of the market by those organizations that lack the vision to figure out a way to get in on it… is it that they lack the vision, or that they'd never give up the fat profit margins that buy their summer homes while driving us insane… I'd argue it's the latter.
To be more plain about it, everybody pays royalty fees, but only internet and satellite radio has to pay licensing fees. Suspicious? Oh my yes.
I had a chance to talk with Pandora founder Tim Westergren, who pointed out the difference between traditional radio, which is largely unchanged since its invention, and eons behind the innovative curve, by saying that, "Digital music is moving at lightning speed. This is a crystal clear example of a law that's behind the times."
In all fairness, it's a whole industry that's behind the times. The only changes the industry has seen is that more and more stations have been consolidated into ownership by the same handful of gigantic corporations who largely control the market.
Web 2.0 is a very different world, and more different still than even the guys with million-dollar focus groups could have expected. They somehow failed to understand that with 6.5 million loyal, loving listeners, there would actually be some outcry at these attempts to shut them down. The fax machines at the Senate and House of Representatives have apparently been printing off the hook, but it isn't too late to let a little more of your voice be heard.
If you're already a loyal lover of Pandora, take a minute to print and mail a note, however brief, and mail it to your representative. This licensing fee is unjust, unfair and unequal, and needs to be stopped. If the guys who have run the listening world for 80-years want to stay on top, they're going to have to be smarter, and not just have the industry tighter by the nuts.
Here are a few places with more information about Pandora, and how you can help your voice be heard, regardless of your opinion.
