The SoundExchange, a consortium of music record license holders formed to extract royalties from broadcasters, will not compromise on the proposed retroactive royalty rates and Pandora says it will close soon. Despite being one of the most popular internet radio sites Pandora says it cannot make money under the rates. SoundExchange has put in place rate hikes for internet and satellite radio stations on a per user basis. Internet radio pays much higher fees. Broadcast radio stations will get the SoundExchange attention next.
Some journalists say this is not all SoundExchange's responsibility -
There's no doubt that SoundExchange has been strong-arming the Internet radio industry into oblivion. But most Internet radio stations like Pandora offer their services for free, or they offer accounts with more features at incredibly cheap prices. While some stations display ads on their website, Pandora hasn't done itself any favors by offering desktop clients and a wildly popular iPhone application (iTunes link) that rake in millions of users without so much as a single ad. Perhaps, for now, the "just build it and we'll figure out the business model later" approach won't be enough to save this experiment in new media.
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