Pandora Exits UK, Protests Net Radio Rates 'Far Too High'

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Music recommendation engine Pandora will switch off in the UK indefinitely on January 15, blaming royalties agencies for strangling its business. Pandora shut off access to those outside the US in July “because of the lack of a viable license structure for internet radio streaming in other countries”. Despite having tried to hammer out such a structure since then, founder Tim Westergren emailed UK users last night to say the switch-off will take place January 15.

Westergren: “Both the PPL (which represents the record labels) and the MCPS/PRS Alliance (which represents music publishers) have demanded per track performance minima rates which are far too high to allow ad supported radio to operate. We have been told to sign these totally unworkable license rates or switch off, non-negotiable.” (See full email).

He suggests the issue affects more than just Pandora, saying the UK, “an epicentre of musical creativity”, is failing to back new businesses: “The only consequence of failing to support companies like Pandora that are attempting to build a sustainable radio business for the future will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans.” Westergren will “keep fighting” in the UK for “a fair and workable rate structure” and still has faint hopes of a relaunch, but it’s unlikely unless he can win popular support for rates reform.

Pandora is also fighting for survival at home in the US, where a hike in internet radio rates has threatened such services. What chance now a similar dispute on our shores? Rival recommendation engine Last.fm in June said proposed PPL were even higher than those in the US and “continues to be a massive challenge for us but it’s one we’ve been struggling with for years”. But then, Last.fm has been far more successful in striking rates agreements – and now has a big owner that can finance those payments. The UK Copyright Tribunal laid down online rates that should be paid to songwriters, composers and publishers in July after the MCPS-PRS agreed on terms with some online services.

4 Comments

Robert Andrews

Yep, thanks Chris. I linked to both the press release and the detail of the Joint Online License. I've requested conversations with both the MCPS-PRS and PPL multiple times today since early this morning, to explain how things work and where a service like Pandora stands, but so far they haven't been able to muster anything.

Chris Thornett

Robert,

The MCPS-PRS press release you link to doesn't tell the full story. It fails to mention that when the accumulated figure per song per person is greater than the interactive webcasting flat-rate – which in Pandora's case would have been 6.5% of gross revenue, I believe – the service has to pay that instead.

This has meant that Pandora would have had to pay the MCPS-PRS an estimated (Tim's own estimate) 45% of it's gross revenue.

Read page 31 of the MCPS-PRS' Joint Online Licence T&Cs;for the details. I believe Pandora could survive by going subscription-based, but why should it be forced to do that when analogue radio is ad-supported?

Personally, I have to believe this is just a mistake, rather than some conspiracy to kill off services like Pandora, because the MCPS-PRS is going to lose a large wedge of cash, if it doesn't reassess it's on T&Cs;.

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