Pandora to shut off UK IP addresses from next week

Pandora, the US-based personalised internet radio service, has announced to its customers that it will be shutting down its service to all UK-based IP addresses as of next week. Back in July last year, Pandora blocked use of its service outside of the US because of what Tim Westergren, Pandora founder, described as “the lack of a viable license structure for Internet radio streaming in other countries”. It kept UK IP addresses open, hoping to negotiate a viable license from UK collecting societies. Today, in an email to his UK-based customers, Westergren admitted defeat, and exited the European market with this caveat to the recording indiustry:

It continues to astound me and the rest of the team here that the industry is not working more constructively to support the growth of services that introduce listeners to new music and that are totally supportive of paying fair royalties to the creators of music. I don’t often say such things, but the course being charted by the labels and publishers and their representative organizations is nothing short of disastrous for artists whom they purport to represent – and by that I mean both well known and indie artists. The only consequence of failing to support companies like Pandora that are attempting to build a sustainable radio business for the future will be the continued explosion of piracy, the continued constriction of opportunities for working musicians, and a worsening drought of new music for fans. As a former working musician myself, I find it very troubling.

Pandora’s future is also uncertain in its homeland, the US, where it is fighting massive hikes in web radio royalty rates. Savenetradio.org has more details of their campaign stateside.

Last.fm – the UK’s personalised internet radio service – has negotiated with individual record labels to ensure its service compensates artists fairly. Last year’s sale of Last.fm to media giant CBS for a reported £142m shows just what value might lie in personalised internet radio. Part of Last.fm’s business model is to gain commission from sales of music it has introduced to its listeners, supporting Westergen’s assertion that services like Pandora and Last.fm eventually only increase the revenue that flows to artists. But complex licensing schemes, and collecting societies unsure how to interpret the advances of innovative web radio companies, can get in the way.

Last week, the European Commission announced a new initiative which aims, in part, to create a legal framework to encourage creators and owners to make content available on line. But any new framework emerging from this initiative looks like it will be too late for Pandora.