Audio Ads on Pandora

You might have run across the handful of articles in the last day or so about online "predictive" radio service Pandora adding audio ads. This move is no doubt an attempt to develop a sustainable revenue stream for Pandora's free services (the company also offers yearly ad-free subscriptions for $36).

We at FMC are big Pandora fans, and we know we're not alone. It's a good bet that the service's regular users will continue to support it, largely due to Pandora's easy-to-use and highly addictive architecture that allows listeners to customize any number of "radio stations" based on their musical preferences. But we'll have to wait and see.

Pandora founder founder Tim Westergren said that ads would only appear once every two hours, which is nowhere near the level of interruption heard on commercial terrestrial radio. Westergren has been front-and-center in the ongoing webcasting royalty rate negotiations, claiming that the rates set forth by the Copyright Royalty Board in March 2007 would drive Pandora and other online broadcasters out of business.

In our original response to the CRB decision, FMC “urge[d] the parties to work together to strike a balance that recognizes the value of webcasting, but also properly compensates artists, performers and labels for uses of their work." We also voiced our support for a Public Performance Right for terrestrial radio, which online broadcasters pay but over-the-air stations do not. (Check out FMC Executive Director Ann Chaitovitz's January 7, 2009 Huffington Post Op-Ed and our Performance Right Fact Sheet to learn more.)

Negotiations between labels, artists, big and small webcasters and SoundExchange (the organization tasked with collecting and distributing royalties from online broadcasting) continue. This FMC post from September 2007 helps explain what will happen should all parties come to an agreement.

In related news, we're thrilled to have Tim Westergren confirmed as a panelist at our upcoming DC Policy Day on February 11, 2009 at the National Geographic Society here in Washington. You'll wanna think up some good questions and reserve your spot now! A limited number of musician scholarships are still available; head here to apply.