The days of marveling over online music service Pandora's ability to know that you hella heart Oakland's own Digital Underground may soon be over. A court decision adored by the recording industry doubled the royalties Web broadcasters have to pay. Radio stations pay nothing to for rebroadcast rights to recordings, but do pay publishers a royalty. Satellite broadcasters pay nearly half what online music providers are charged. Pandora reports that the charges, payable to royalty collector SoundExchange, will amount to $17.5 million of their $25 million in annual revenue. Which would permanently mangle the company's business model, according to CEO Tim Westergren. The flip, convenient thing to do here is to blog about the evils of the rapacious music industry. Sure, SoundExchange is notorious for its long list of artists it can't find in order to pay, while it naturally collects royalties regardless. But after Muxtape's run in with the RIAA today, one has to think there's blame to spread around. What did these music entrepreneurs expect?Let's not forget: Apple pays a similar percentage to music labels for sales through iTunes, and yet it manages to stay in business. For that matter, Google pays publishers the bulk of advertising revenues it collects on ads it places on their websites. Oh, and how much of Wal-Mart's revenues get shipped straight to its suppliers in China? It's not like it's impossible to make a living in a business where most of your revenues go to the people who make the business possible. Perhaps this is Pandora's problem, not the music industry's. One way Pandora could boost revenue and curry favor with the RIAA is through good old-fashioned payola. Why not strike a deal to waive royalties on tracks the industry would like to see promoted and mixed into playlists just a little more heavily than usual? Users would still have a "commercial-free" listening experience, and Pandora could provide the thumbs-up, thumbs-down data back to promotions and marketing departments with contextual data like related songs as chosen by listeners to boot. Or Pandora could cater to the hipster avant-garde. Why not broaden affiliate sales to vinyl? LP sales jumped over 33 percent from 2006 to 2007. Let me program "only if available for online purchase on vinyl" into my Pandora listening schedule. If I could click-to-buy a 12" of Pushin' On by the Quantic Soul Orchestra, I'm sold on the record and even $10 a year for the filter feature and a few others besides. (Photo by Steven Toomey)
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