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. read more

On September 23, songwriters, publishers, record labels and digital music services announced they had reached an agreement on mechanical royalties for songs played on online music services.

Called a “breakthrough that will facilitate new ways to offer music to consumers online,” the voluntary agreement crafted by the Digital Media Association (DiMA), the National Music Publishers’ Association (NMPA), the RIAA, the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA) ended a longstanding dispute about mechanical royalties for interactive streaming and limited downloads. read more

FMC has been following the back-and-forth about webcasting royalty rates almost as long as webcasting has existed. We’ve always recognized the value of smaller online broadcasters to the online music world — their passion and energy mean an awful lot of music that would otherwise have no outlet can reach ears around the world. We also support the continued development of larger webcast services, particularly the ones with innovative technology that conforms to your personal taste, like Pandora. On the other hand, we believe that artists should be fairly compensated for their work, and that the success of new technologies can’t come at the expense of creators’ interests. read more

The Cold War between SoundExchange and webcasters over the new royalty rates is thawing — at least in part. SoundExchange announced yesterday it had reached a compromise with some large webcasters that will give them a break on the rates set by the Copyright Royalty Board back in March.

The CRB had required webcasters to pay a minimum $500 "per station per channel" fee with no cap. This would add up to a hefty chunk of change for webcasters (such as Pandora) that allow each listener to create a persona web channel. Under the terms of the compromise, each webcasters’ royalty rates will be capped at $50,000 regardless of the number of stations or channels. read more

Kurt Hanson over at Radio and Internet Newsletter offers an excellent (and expansive) rundown on the history of copyright law leading up to the recent decision by the Copyright Royalty Board to set higher royalty rates for webcasting. The history is to long to quote, but Hanson rightly diagnoses (with one major caveat) the problem with the ruling:

"And thus we end up with a situation in we’re in right now, in which a trio of judges granted the copyright owners a royalty rate from Internet radio that is effectively, I believe, more than 100% of the total industry’s revenues!… read more