RIAA May Get Its Wish: Pandora Leaning Towards Shutting Down Over Webcasting Royalties

from the how-the-RIAA-killed-internet-radio dept

Last year, we noted that the new webcasting royalty rates pushed through by the RIAA appeared designed specifically to kill internet radio. These royalties are different and much higher than things like traditional and satellite radio, despite being much more fragile at this point in their development. As if to prove the point, Pandora, one of the largest and most successful online streaming radio providers is now saying that it’s going to have to shut down if the royalty rates aren’t changed shortly.

This is exactly what the RIAA wants, by the way. Even if services like Pandora introduce people to tons of music (personally, I’ve bought a ton of music I found on Pandora), much of that music is not from an RIAA-member label. The RIAA knew exactly what it was doing in pushing these higher rates: it was killing off alternative routes to promoting non-RIAA music. The RIAA labels have always thrived off a very limited distribution and promotion channel. After all, distribution and promotion are where record labels really make their money. Competing methods of distribution and promotion are threats to be killed off — and the RIAA may have succeeded here (with Congress’ and the courts’ help, of course).

Oh, and don’t think the solution is to only play non-RIAA music. The RIAA’s spinoff, SoundExchange, gets to collect money on non-RIAA music as well. Oh yeah, it gets better too: if SoundExchange can’t find the musicians to pay, it gets to keep the money. That’s why it has a history of not looking very hard for musicians in order to pay them.

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Companies: pandora, riaa, sound exchange

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Comments on “RIAA May Get Its Wish: Pandora Leaning Towards Shutting Down Over Webcasting Royalties”

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bob says:

screw the music industry

Pandora is the best thing to happen to the music industry since radio.
If they kill it I’ll do my part to drive the industry into the ground for good.
I’ll make sure I never legally purchase another piece of music again.
I’ll also do my best to encourage everyone I know to do the same.
It will be unfortunate for the musicians, but RIAA and their peers need to die a cold hard death so this industry can have a new start.

Anonymous Coward says:

Re: screw the music industry

That’s not the right response. The right respose is what we should be doing already: avoiding RIAA member lables and promoting new/innovative/independant artists. Is there a convenient place one can go to see what artists are on which lables?

There’s no reason musicians need to suffer as the lables crash.

Anonymous Coward says:

Re: Re: screw the music industry

But how do we find the new/innovative/independent artists? If Pandora goes away, then who will promote them? Isn’t anything resembling Pandora for non-RIAA artists still web radio? And furthermore, what’s the difference between the RIAA and SoundExchange? Nothing, as I see it. Therefore, I won’t buy any music, from any artist, ever again. Easily done. But I will download for free to my heart’s content. Even easier.

Anonymous Coward says:

Re: Re: Re: screw the music industry

How do we find them? Word of mouth. You find a cool non-RIAA band, you tell your friends, post it on a blog, send a Tweet, whatever. It’s the Internet, man. Same thing if you find such-and-such band is working for the RIAA. That way we can boycott the RIAA with the least fallout against artists as possible. Hurting the artists because their lables suck is dumb. (But you can boycott U2, Bono’s a certified ass.)

Anonymous Coward says:

Re: Re: Re:2 screw the music industry

I really meant “how can I hear the music to even find out if I like it?”

And sorry if the artists suffer collateral damage, but if they don’t like it, maybe they should find a different organization to align with. I’m not going to waste my time trying to make the distinction between the RIAA and the artists. I’m also not going to try to distinguish between which are RIAA artists and which aren’t, because the ones that aren’t are covered by SoundExchange, which I find just as revolting as the RIAA. So the only option left, to avoid supporting organizations that I find immoral and ethically repugnant, is to simply not buy music at all. I might pick up some stuff at a garage sale or on eBay, but I won’t buy any music from any retailer on this planet.

But I will happily download whatever I that I like.

Hovis says:

Re: Re: screw the music industry

Hey, I don’t know where to find that, but if someone wants to toss it together I just registered briaa.net for that purpose. I may find the time to set that up myself – but if someone else wants to do the hard work and boycott the RIAA I’ll give you the domain. I just don’t want some squatter snatching it up. (like briaa.com)

Jaypoc says:


I find it amazing that the RIAA continues to dig their own grave. I personally have seen more people turn to piracy because of absurd limitations that legal music downloading imposes on it’s customers. High costs, Low availability and technical restrictions such as DRM make legal music downloads/licensing unpalatable.

People do currently PAY OVER $15/MONTH to services that allow them to download pirated music. If the recording indusry would put their greed aside, they could be making this revenue instead of it going to support illegal music downloads. RIAA, wake up.

David (profile) says:

Web Radio vs Web Site

AC @6 has a good point. What exactly is RIAA’s definition of a “Web Radio station”

Wikipedia defines it as “a streaming medium that presents listeners with a continuous “stream” of audio over which they have no control, much like traditional broadcast media; in this respect, it is distinct from “on-demand” file serving”

So if Pandora offered some sort of audience interaction, maybe Last-FM style track skipping, would it be off the hook?

Greg says:

here's hoping...

the riaa dies quickly. It’s inevitable, since they don’t provide any value anymore, (and don’t seem to want to try) but they seem determined to make everyone feel their pain as they go. Pandora is an amazing service. The only new music I’ve found in the last few years has been through Pandora and Last.fm.

Musicians please avoid RIAA labels! Promote your music through free internet services and kill off the RIAA parasites.

Killer_Tofu (profile) says:


I know it is technically the law that SoundExchange gets to collect on non-RIAA member songs royalties, but something has to be done to change that.
Since congress has been bought out in this regard, ALL internet radio should boycott the paying of ANYTHING for non-RIAA member’s songs. Why pay royalties on something to somebody who has absolutely less than nothing to do with it?
If they all did it in unison, maybe congress would wake up, just a tiny, if we are lucky. I know I am hoping and asking for too much, but sometimes the people have to stand up for whats right when its pushed too far.

If they all banded together, the industry could try to sue, and the officials could go after them. Then let us see the outcry of the public about how stupid these laws are once tons of attention is drawn to them beyond just our tech savvy crew.

I know, I am way too optimistic sometimes.

If Pandora goes down, my thoughts are perfectly in line with the first poster here. I will do everything I can to see the RIAA die as soon as possible, including marketing against them to my friends who buy lots of music.
I have found lots of good music on Pandora. Yes, I do not buy it all, but I do buy some. And that some would have never been found without Pandora I am sure simply because it is not RIAA tripe.

Mogilny says:

Pandora is silly

Pandora has nothing to offer at the bargaining table. If RIAA doesn’t want internet radio, then threatening to shut down is a just a desperate attempt to stir the public. The problem with this plan is that the public has absolutely no influence over RIAA’s actions, absolutely nothing.

Pandora needs to go back to the drawing board and think of a new business plan. Yes, you just got kick in the nuts. Don’t just cry about it.

Anonymous Coward says:

Re: Pandora is silly

The only thing wrong with your view is this: It isn’t up to the RIAA to decide what businesses succeed, and which don’t. And I believe the public gets to vote with their wallets, which every poster here (you being the sole exception), seems ready and willing to do.

We can only assume you are one of the soulless RIAA shills.

Mogilny says:

Re: Re: Pandora is silly

Do you think the general public will think about the poor internet radio industry when they go buy tunes off itunes or in a HMV? Most likely not. I’m willing to bet that most people who listen to internet radio don’t buy as much music as the avg. population.

If there are so many loyal supporter out there, are they willing to pay a small subscription fee? Maybe Pandora should start generating content, self generated content is a fixed cost, unlike music where you have to pay more royalty for more users and more often its play.

RIAA are extortionists. I hate them probably as much as you do. But the RIAA is Pandora’s only supplier and internet radio is small business to the RIAA. I just think Pandora needs to do something at their end before crying to the public about it.

Anonymous Coward says:

Re: Re: Re: Pandora is silly

The RIAA is not Pandora’s only supplier, since there are plenty of independent artists. But the point is that it was the RIAA that demanded the obscene royalties, even if SoundExchange is collecting most of them.

Please explain why Internet radio is any different than satellite or terestrial radio? Why should web-based radio pay more for the same thing?

Jim says:

Re: Re: Re: Pandora is silly

“Maybe Pandora should start generating content…”

You miss the point. All songs played require a fee to SoundExchange. According to the law, even if Pandora DID generate their own content they would STILL have to pay up. All music that streams must have royalties that go to SoundExchange.

Hovis says:


Guess what people? This is the USA, and we have the right to decide what happens in our country. Comment 12 provides a link which I will repeat: savenetradio.org

This site is dedicated to preventing the death of internet radio. You can help by calling your Senators and Representative and telling them how much bullshit this is, and how much internet radio means to you.

If you go to that site, they’ll make it easy and GIVE YOU THE PHONE NUMBER of the people that need to hear you.

If you don’t make yourself heard and do something about this, then you need to stop complaining because you apparenty DON’T care enough.

Anonymous Coward says:

Re: savenetradio.org

Guess what people? This is the USA, and we have the right to decide what happens in our country.

That all depends on how much money you have.

You can help by calling your Senators and Representative and telling them how much bullshit this is, and how much internet radio means to you.

You better send them lots of money first if you want them to care.

If you don’t make yourself heard and do something about this, then you need to stop complaining because you apparenty DON’T care enough.

Like I said, if you really care and want to be heard you better send them lots of money. Oh, and never vote for a Republican or a Democrat. Too many members of both those parties support whoever gives them the most money (RIAA in this case).

Anonymous Coward says:

they probably know they are going to die for sure so they are trying to extract as much money from our pockets before we realize they are all a bunch of thugs and change laws accordingly. They will bribe as many politicians as possible to get them to pass insane laws/treaties (i.e. ACTA) that only serve to make these companies richer, not benefit the country/humanity.

it is classic governmental/corporate corruption that only serves themselves at the expense of everyone else.

Charlie Potatoes (profile) says:


Ok, not to offend music lovers, but we aren’t talking about food or shelter, our car, or even gasoline for it. Music is hardly a basic necessity of life. Why not just go for a month or even six months without buying one single tune?…nothing. Surely the buying public can make it rain longer than RIAA can tread water. To hell with someone who screws me. I simply don’t do business with them. Can’t we give up new tunes for a very short period of time? All this whining seems a little juvenile to me. I mean we ain’t talking bout the Sex or Beer industry. Just screw em… Stop buying their overpriced product…and stop writing about it. damn.

GeneralEmergency (profile) says:

Hoist them with thier own petard.

I can give away my own music, but someone else can’t give it away by streaming it?

Here’s an idea for a lawsuit foundation case:
Set up a streaming channel that just loops a single track of very bad (or good if you have it in you) music that you compose and record about the extortion racket that SoundExchange truly is and how you the artist specifically denies SoundEx the right to represent this performance in any manner. The verbal content of the song is a legal notice of rights restriction.

When SoundExchange comes to enforce the compulsory license collection, tell them to pound sand and copy the EFF.

devilnis says:

Typical RIAA BS

This is the exact kind of thing they’ve been doing for years to maintain their stranglehold on the music industry. When you hear the presidential candidates talk about lobbyists for special interests, well the RIAA is the prototype model for that kind of lawmaking.

Eventually Pandora will probably die, leaving a market niche that will be filled by an RIAA approved entity whose profits will be going to line the same ol’ pockets. Oh well, life isn’t fair. Hopefully SoundExchange will do a decent implementation.

Keybored says:

A real travesty

I’m sorry to hear this news. Pandora is an awesome project. I too listen fairly often and yes have gone out to locate and purchase some of the songs I’ve heard.

Remember this old adage? Maybe I’m showing my age but it’s exactly what the RIAA is doing and it is a bog load of crap:

Work the system and the system will work for you. Good work RIAA, YOU’VE GOT IT DOWN TO A SCIENCE…

anonymous says:

Change the market to shut out RIAA

I dont understand all of the nuances of this issue, however, it seems to me that if the online radio companies used independent artists (vs RIAA artists), people would have more exposure to said independent artists and redirect their purchasing dollars in that direction. This will have the double effect of avoioding the insane royalties, and eroding the market for RIAA artists. I suppose it makes the best of a bad situation.

The real shame of all this is that it was allowed to happen in the first place. Our polititians are unquestionalbly corrupt if they support the RIAA’s rhetoric. The government is supposed to help the people, not help companies kick other companies in the head, or help them to pick our pockets.

Robert C. says:

Subscribe to Pandora

One other thing we could do, which nobody seemed to suggest is simply subscribe to Pandora’s paid service. It’s pretty cheap and there’s no ads. You just pay once a year and that’s it. It also makes you feel warm and fuzzy that you may. Be contributing to their survival.
By the way, I’m not from Pandora or associated with them in any way. Just thight I’d make it clear.

deathspeed says:

drive soundexchange to bankruptcy?

Maybe techdirt readers should take it upon themselves to contact every artist on the soundexchange unpaid artists list, to let them know that soundexchange is hoarding i mean safeguarding their money. I’ve already sent a few emails to bands whose music i have and whose web presence i could find, but the list is too long for me to hit them all.

Pjerky says:

The RIAA is illegal!

I find it amazing that the RIAA hasn’t be brought up on charges of racketeering, anti-trust, and larceny yet. What they are doing is highly illegal. First, even if you are not a member of the RIAA, their collection organization, SoundExchange, has the “right” to collect fees for your music being played. And they don’t have to give you the money they collect until after you have proven ownership of the music and have paid for membership into their organization.

Essentially forcing all music to be paid for, irregardless of whether or not the copyright owners want the music to be paid for or not.

The only solution for this is a two-fold solution. First of all for everyone everywhere to only listen to non-RIAA music and secondly for the organizations and individuals that play said music to refuse to give a dime to SoundExchange. If enough of us refuse, which is very easy not only morally and ethically, but also would be easy to win legally in the long run (no jury would side against you on this).

Refuse to pay the RIAA!
The RIAA are nothing but a bunch of wallet-raping terrorists.

Killer_Tofu (profile) says:

Re: The RIAA is illegal!

Exactly. Just refuse to pay SoundExchange for anything not from the labels. I know the law says otherwise, but what better way to call lots of attention to it, than to ignore it and cause a big stink about it.

If they get smacked down with large fines, they will just go out of business anyways, so it is not like they would be losing all that much compared to what they stand to lose right now (depending on what type of corporation it is set up as, some setups state that for a companies actions, you cannot go after the owner’s assets).

Realistically, what have they got to lose? A couple of servers that they could smash to bits before handing them over?

Sometimes what is law is not what is right. And sometimes it is better to stand up.

Anonymous Coward says:

Its all they have . . .

The only thing a large record can really offer an artists (besides usery lending) is radio air play. Radio airplay is so centralized its very easy for big money players to have an extrememly large effect on what gets aired. Decentralizing that market would weaken the only real advantage a large record company can offer an artist.

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