Pandora’s Box: The Cost of ‘Free’ Music

Pandora’s box: The cost of ‘free’ music: Aidin Vaziri | How much should “free” music cost and who should pay for it? That’s the deceptively simple question at the heart of the latest round of legal wrangling surrounding the Oakland-based online radio service Pandora, which has launched an effort to get federal legislation passed to lower royalty rates paid to musicians so that it may remain competitive. In response, more than 100 artists, including high-profile acts like Rihanna, Pink Floyd and Katy Perry, have signed an open letter opposing the move. “Pandora’s principal asset is the music,” the letter states. “Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s not how partners work together.” Pandora argues that Internet radio royalty fees should be in line with those of other services, such as cable and satellite radio. According to the company, it paid 54 percent of its revenue to record companies and artists last year. By comparison, Sirius satellite radio paid 8 percent. Pandora, however, agreed in 2007 with the artists’ and labels’ representative organization to its royalty rate.
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