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Music Publishers kick UK internet radio into touch
• Pandora forced out of UK by "excessive" demands
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By
The Minx, Music Biz Correspondent
Wednesday,
9 January, 2008
Online radio site Pandora is to halt its UK operations following a breakdown in negotiations with royalties collectors.
The streaming music service plays users a selection of tracks based on their listening habits and data from the Music Genome Project, an initiative which classifies music using 400 separate attributes.
Unlike many Web 2.0 sites, Pandora actively set out to engage with copyright bodies as part of efforts to legalise its activities.
Despite these efforts, the project has failed to find an "economically workable" arrangement with the Phonographic Performance Limited and the Mechanical Copyright Protection Society.
"It continues to astound me that the industry is not working more constructively to support the growth of services that introduce listeners to new music and that are totally supportive of paying fair royalties to the creators of music," said founder Tim Westergren.
"The only consequence of failing to support companies like Pandora, that are attempting to build a sustainable radio business for the future, will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans."
Clear case here of the big boys trying to flex their muscle when dealing with minnows but totally failing to solve the biggest problem they faced recently, extending copyright for musicians to 70 years. Who do they think they are helping with this stance?
Internet radio stations are mostly free and rely on advertising for their income. They claim that if per track payments are charged those fees will quickly outstrip their entire revenue, never mind just their profit margins.
In the US the stations are fighting new charges which include a minimum fee. These charges, they say, are higher than those paid by satellite radio stations, while traditional broadcast radio stations do not pay the charges at all.
An MCPS/PRS spokesman said: "Licences are available for all online and mobile services and the terms applicable to webcasters were set down in the UK last year by an official independent and expert panel know as the Copyright Tribunal. In reaching its determination the panel heard considerable evidence from all sides of the online music business."
BACKGROUND
In an email to users, Pandora founder Tim Westergren wrote:
"After over a year of trying, this has proved impossible. Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded per track performance minima rates which are far too high to allow ad supported radio to operate and so, hugely disappointing and depressing to us as it is, we have to block the last territory outside of the US."
"We have been told to sign these totally unworkable license rates or switch off, non-negotiable...so that is what we are doing. Streaming illegally is just not in our DNA, and we have to take the threats of legal action seriously."
Unlike Web 2.0 poster children such as YouTube, Pandora had tried to work with copyright holders from the outset.
Yet Pandora has struggled to create a sustainable business, or find capital willing to sustain the business until it finds one. Without revenue, it's hard to pay the smallest bill.
In an email to subscribers this week, Pandora founder Tim Westergren said finding agreement had proved impossible.
The UK version of Pandora, an online music streaming service based in California that lets people build personalised stations, will close on January 15.
"Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded per track performance minima rates which are far too high to allow ad-supported radio to operate and so, hugely disappointing and depressing to us as it is, we have to block the last territory outside of the US," said Westergren, a former professional musician.
He condemned labels and music publishers for pursuing a course that was "nothing short of disastrous for artists whom they purport to represent", and said Pandora introduced listeners to new music while being "totally supportive of paying fair royalties to the creators".
"The only consequence of failing to support companies like Pandora that are attempting to build a sustainable radio business for the future will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans." Pandora would "keep fighting for a fair and workable rate structure" that would allow it to resume operations in the UK.
Full Text of letter
This is the full unedited text of his letter to U.K Pandora users:
"hi, it’s Tim,
This is an email I hoped I would never have to send.
As you probably know, in July of 2007 we had to block usage of Pandora outside the U.S. because of the lack of a viable license structure for Internet radio streaming in other countries. It was a terrible day. We did however hold out some hope that a solution might exist for the UK, so we left it unblocked as we worked diligently with the rights organizations to negotiate an economically workable license fee. After over a year of trying, this has proved impossible.
Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded per track performance minima rates which are far too high to allow ad supported radio to operate and so, hugely disappointing and depressing to us as it is, we have to block the last territory outside of the US.
It continues to astound me and the rest of the team here that the industry is not working more constructively to support the growth of services that introduce listeners to new music and that are totally supportive of paying fair royalties to the creators of music.
I don’t often say such things, but the course being charted by the labels and publishers and their representative organizations is nothing short of disastrous for artists whom they purport to represent - and by that I mean both well known and indie artists.
The only consequence of failing to support companies like Pandora that are attempting to build a sustainable radio business for the future will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans. As a former working musician myself, I find it very troubling.
We have been told to sign these totally unworkable license rates or switch off, non-negotiable…so that is what we are doing. Streaming illegally is just not in our DNA, and we have to take the threats of legal action seriously. Lest you think this is solely an international problem, you should know that we are also fighting for our survival here in the US, in the face of a crushing increase in web radio royalty rates, which if left unchanged, would mean the end of Pandora.
We know what an epicenter of musical creativity and fan support the UK has always been, which makes the prospect of not being able to launch there and having to block our first listeners all the more upsetting for us.
We know there is a lot of support from listeners and artists in the UK for Pandora and remain hopeful that at some point we’ll get beyond this.
We’re going to keep fighting for a fair and workable rate structure that will allow us to bring Pandora back to you. We’ll be sure to let you know if Pandora becomes available in the UK. There may well come a day when we need to make a direct appeal for your support to move for governmental intervention as we have in the US. In the meantime, we have no choice but to turn off service to the UK.
Pandora will stop streaming to the UK as of January 15th, 2008.
Again, on behalf of all of us at Pandora, I’m very, very sorry.
-Tim Westergren
(Pandora founder)
The Naked Reader
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