SEC Told Pandora To Be More Explicit In Its IPO That Its Business Is Likely Unsustainable Due To Crazy Licensing Rates
from the licensing dept
Now it's come out that prior to Pandora's IPO, the SEC asked the company to be more explicit about the fact that its business plan relies on a lobbied agreement, and that under the Copyright Board's rates, the company's business model is unsustainable:
You currently operate under a business plan strongly reliant on lobbied concessions and federal court and federal agency consent decrees and settlements, setting reduced royalty and licensing rates that expire in 2015 and that ordinary rates, not subject to such extraordinary measures, to which you may be subject upon the expiration of these exceptions make your current business plan unsustainable, as discussed in your risk factors on page 15 and 16;Again, the real issue here is the ridiculously high licensing fees, set by a completely out of touch and technically clueless Copyright Board. These are the baseline for any negotiation, and while an agreement was reached to let Pandora (and many others) have lower streaming rates for the time being, it seems unlikely that the recording industry will agree to any lower rates in the future, and will only try to push for higher rates. This is unfortunate, given that Pandora is a cool service and it would be nice if it could survive. And, don't think this only impacts Pandora. Other music streaming services face similar licensing issues as well.