Pandora looks towards the future

Popular online radio service Pandora recently agreed to a new royalty pay structure with copyright holders, received a further cash injection of $35 million, and looks forward to the future of online radio.

During a recent chat with Pandora founder Tim Westergren, CDFreaks received a unique insight into a very complicated business.  Westergren, who grew increasingly frustrated with rumors of Pandora’s demise over the past few months, said his online business is alive and well, though there is much work left to be done.

Specifically, Westergren doesn’t think it’s fair Pandora must pay such high royalties — without offering specific royalty rates or fees during our chat — compared to radio and other broadcasters.  The site pays royalties for each song played and for each listener using the service at the time, Westergren clarified, noting that royalty fees quickly add up.  Pandora executives will continue to negotiate with SoundExchange, trying to find a fair number both sides can agree to.

On the bright side, however, the company received an additional $35 million funding from Greylock Partners, showing the power of the popular Internet music-streaming web site.

“Consistent with our past practice, the amount and valuation are not being disclosed.  New funds will be used toward the continued growth and development of Pandora,” Pandora said in a statement.

Pandora now has a 40-hour listening cap for each listener, though there are a couple options available for heavy Pandora listeners.  The first option is paying a $1 once the cap has been met, or $36 per year for a 12-month subscription to the Pandora One service.  Pandora One offers unlimited listening, no advertisements, higher-quality 192 Kbps streams, personalized skins for the Pandora desktop application, and other included features.

I haven’t tested the Pandora One service yet, but plan to give it a shot some time next week.  I also plan to chat with Westergren again in the future, so if you have any thoughts regarding Pandora, feel free to post a comment with your question or comment.