It looks like the battle between streaming music services, like the popular Pandora online radio, and the organization representing musical artists and record companies is coming to a head.  According to an article in the Washington Post, today, online radio stations like Pandora are required to pay significantly higher royalty fee than traditional radio, and even satellite radio stations.

Apparently, this all stems from a decision by the The Copyright Royalty Board last year, which, “decided that the fee to play a music recording on Web radio should step up from 8/100 of a cent per song per listener in 2006 to 19/100 of a cent per song per listener in 2010.”  Some estimates indicate that a company like Pandora could end up paying up to $17 million in royalty fees annually.  Some smaller webcasters could end up paying up to three times their annual revenues in royalty fees.  Negotiations are ongoing between the two sides, but they are still miles apart, with no movement in sight.  

I think it is a real shame to see this kind of battle between what is essentially the traditional distributors and the modern era.  The means of media distribution is rapidly changing, and the traditional models are falling by the wayside.  I am positive that digital media is and will be the wave of the future, and I think there is an incredible opportunity for these distributors to cast off their antiquated notions and work together with companies like Pandora and other online radio networks.  They may yet shutter Pandora, I have no idea; and certainly some of the other smaller networks are likely to fall prey to the traditional method of distribution.  But this cannot last for long.  As more and more musicians see increased opportunities in this new digital format, I suspect we will see more bands following the lead of Nine Inch Nails and others who eschewed their labels and chose to distribute their albums exclusively online.

The digital age is not coming, it has already arrived.  The traditional distributors can embrace this change, or watch on the sidelines as the Curt Floods of the world  shatter the status quo of the music industry, the way he did for baseball so many years ago.

[via Washington Post]

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