Harrison, in his post, lamented how traditional music-industry organizations are using "unprecedented royalty increases" to stunt Pandora.īut the license holders fire back that Pandora is the one taking advantage. It also lobbied Congress to pass an Internet Radio Fairness Act that would set up a panel of judges to set rates. It is suing ASCAP for discrimination and anticompetitive tactics. Pandora has been fighting to get its radio costs at parity with traditional stations. The paucity of cost savings underscores how the move is also a symbolic protest on Pandora's part. It is only buying one now as a measure against publishers that "discriminate against Pandora" with significantly higher rates. Based on last year's top line, that equates to less than $5 million.Ī Pandora spokewoman said the company has been approached a number of times about opportunities in terrestrial radio. The preferential royalty rates are expected to snag savings worth less than 1 percent of its revenue versus the rates it is currently paying. Buying more stations won't bring Pandora any greater cost benefits.Īnd Pandora's costs savings will be small. In an opinion blog post on The Hill on Tuesday, Pandora lawyer Christopher Harrison said the purchase "makes sense even beyond the licensing parity," adding that the company is excited to personalize radio for an entire community.īut don't expect Pandora to be snatching up stations en masse. It let, for example, radio giant Clear Channel enjoy the lower rates at its iHeartRadio online offering because it had terrestrial stations as well.īy buying a single radio station in South Dakota, Pandora can qualify for the lower rates. That's because a settlement last year put to rest a long dispute between radio operators and one of the big entities that represents publishers - known as ASCAP - by rolling back rates for terrestrial stations and their digital arms too. But by buying a terrestrial station, Pandora piggybacks onto a settlement that gives better rates on that smaller fee stream. The sound recording fees make up the lion's share of its content costs. Pandora pays two royalty streams, one for actual sound recordings and another to composers for publishing rights.
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