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Music recommendation engine Pandora announced it would be shutting off its service to users outside the U.S. Founder Tim Westergren e-mailed overseas subscribers to explain that, while Pandora can easily make music available in the U.S. under the single Digital Millennium Copyright Act (DMCA), elsewhere it needed to strike deals with individual rights holders – but has not managed to make headway on that anywhere other than in the UK. Pandora last night turned on geo-IP detection that blocks non-US users, a move the founder described as “heartbreaking” on his blog. Westergren’s e-mail: “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 to run a viable business” (BBC).
Indeed, it sounds like the outlook for Pandora could scarcely be more depressing at present. First, it has actively campaigned against a hike in streaming royalty rates that risks a rash of internet radio operations but is now due to take effect July 15. Second, Westergren says he will “push for the establishment of effective, centralized licensing bodies around the world,” but that will be a tough task – though indie labels have formed super-agency Merlin to win more clout in exactly this space, whether the majors will find much value in handing over rights negotiation to an amalgamated entity remains to be seen. Third, all the while, Pandora’s rival in the music recommendation field, Last.fm, is gaining ground and has added exactly the kind of licensing deals it needs with Warner and EMI.