Pandora was reportedly bowing to record label pressure over the
use of its service abroad at a time when internet radio is fighting
for its survival. The Copyright Royalties Board, a panel of judges
which reports to the US Congress, has increased the fees online
broadcasters must pay.
Online radio companies have claimed that the increase in fees
will put them out of business, but they have just won a reprieve,
as the CRB has delayed the implementation of the new rule by two
months.
Instead of coming into effect on 15th May the new royalty rates,
which web broadcasters say are up to three times higher than
previous ones for some firms, will come into effect on 15th
July.
The delay gives the companies more time to lobby Congress to
overrule the CRB or pass a new law setting lower rates. A new law
has already been proposed that would overturn the CRB ruling and
fix rates at a level more companies could afford. Called the
Internet Radio Equality Act, the bill was introduced by Democrat
Jay Inslee and Republican Don Manzullo.
Speaking last month to OUT-LAW Radio, Joe Kennedy, chief
executive of Pandora, said that the threat to online radio was
severe. "The judges adopted the proposal to triple the rates for
large webcasters, and for small webcasters it's actually closer to
a 12-times increase in the rates that they pay," said Kennedy.
"It's an extraordinary increase in the rates that will effectively
kill internet radio as we know it today."
"Over 90% of internet radio will simply be gone. The net result
will be a huge loss of diversity, a huge loss for music artists and
a loss of virtually all of the internet radio that exists," said
Kennedy.
Pandora is one of the biggest online radio stations, and it says
that it can no longer broadcast its service outside of the two
countries where it has negotiated licences, the US and the UK.
"Unfortunately, there is no license outside the US and there is
no global licensing organization to enable us to legitimately offer
Pandora around the world," company founder Westergren wrote to
users. "Other than in the UK, we have not yet been able to make
significant progress in our efforts to obtain a sufficient number
of international licenses at terms that would enable us to run a
viable business."
The company said that it would start identifying illegitimate
users by their internet addresses. "Until now, we have not been
able to tell where a listener is based, relying only on zip code
information provided upon registration. We are now able to
recognize a listener's country of origin based on the IP address
from which they are accessing the service. Consequently, on May
3rd, we will begin blocking access to Pandora to listeners from
your country. We are very sad to have to do this, but there is no
other alternative," wrote Westergren.
