Pandora Will Live On, At a Price

By  |  Tuesday, July 7, 2009 at 4:44 pm

pandoraWith the music industry demanding ever-higher royalty rates for online radio, Pandora’s future has been in jeopardy for some time, but now it seems a workable deal has been struck.

The station is “finally on safe ground with a long-term agreement for survivable royalty rates,” Pandora CTO Tom Conrad told TechCrunch today. SoundExchange, which collects royalties for rights holders, agreed to a 40 percent to 50 percent reduction in per-song-per-listener rates in exchange for 25 percent of Pandora’s revenue, through 2015.

Notably, that deal is good for other Internet radio stations, so and Slacker could also benefit from the agreement.

Some users will end up paying for this change. Anyone who listens to Pandora for more than 40 hours in a given month — that’s roughly a tenth of the user base, says TechCrunch — will have to pay $0.99 cents to keep listening. The premium Pandora One service won’t be subject to the additional charge.

Given that Pandora can get a little repetitive after extended listening, the 40-hour cap is a small concession to make, and even then, a dollar ain’t much. Besides, my sense from other Pandora users is that they’re so enthralled with the concept that tiny trade-offs don’t bother them. Little reminders to click on the player window and an occasional ad are minor inconveniences, well-traded for a virtual DJ that knows all about your musical preferences.

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