Pandora may be on verge of collapsing, founder says

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pandoralogo Pandora’s founder Tim Westergren has said that the popular web radio service, with 1 million listeners daily and a popular iPhone application, is on the brink of collapse.

"We’re approaching a pull-the-plug kind of decision," he said to the Washington Post. "This is like a last stand for webcasting."

This comes as web radio stations will pay music royalties higher than their satellite counterparts; with the terrestrial radio stations pay nothing to play songs from the record labels. By 2010, Pandora and other internet stations will need to pay 2.91 cents per hour per listener. Satellite royalties are 1.6 cents per hour per listener.

According to Westergren, Pandora pays around 70% of their $25 million in yearly revenues just to pay for the royalty fees – and that is driving them out of business; with the music industry saying its the radio stations fault and suggest that they find other ways to make revenue – which is kind of funny, because its not true.

Of course, this is just another way that the record labels are ‘compensating’ for their ‘lost revenue’ because of the internet. As well, this is also ridiculous as there a different pricing plans for terrestrial, satellite and internet radio. At least internet broadcasters are doing something legitimate and legal, because many others just don’t give a crap about royalties.