Cheaper Music Royalties Pull Internet Radio Back from the Brink

The future is looking bright for various Web-based radio services such as Pandora, Blip.fm and CBS-owned Last.fm. A new long-term solution for music services such as Pandora includes the reduction of more than 40 percent in the royalties formerly paid by such music-streaming sites to the record industry.

The previously high royalty rates had been widely blamed for the looming collapse of Web streaming services, many of which faced possible shutdown for the past two years. Pandora is now safe from the threat of closure, after reassuring users that long-term agreements and acceptable royalty rates are now in place.

However, for free users of Pandora’s services, this new measure comes at a price. Any free user who now listens to 40 hours of music per month will be asked to pay 99 cents to keep listening. If they agree, they can then listen to unlimited music for the rest of the month. Currently, this will only affect 10 percent of Pandora’s user base.

The U.S.-only agreement between all parties involved will be in effect until 2015, when the future of web-based radio services can be analyzed once again.