Pandora preparing to close

 

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By Stuart Turton

Posted on 18 Aug 2008 at 15:56

Pandora's future looks uncertain as the company's founder claims current royalty payments are crippling it.

Pandora, an online music recommendation service, was forced to close its doors in the UK in January after failing to reach a licensing agreement that would allow it to continue to operate, and the same now looks to have happened in the US.

The company claims that the decision by a federal panel last year to double the per song royalties payable by web radio stations means that its ad-supported revenue model is no longer viable. Traditional radio escapes the fee, while digital radio stations pay significantly less.

The web company claims its royalty fees this year will equate to around 70% of its projected revenue of $25 million, a situation that has the company's founder Tim Westergren fuming:

"We're losing money as it is," he tells The Washington Post. "The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we're doing is wasting money."