Internet radio system getting mixed signal - San Francisco Business Times:

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The Internet radio service is steadiltygaining customers, new employees and high-profile And new partnerships are bringing its personalized service to cell phones, social networka and living room devices. If it can just settle a licensinf fee issue consuming a growing chunk ofits revenue, it may actuallyu survive. "The service continues to grow like the fundamentals of the business are very said founderTim Westergren. "It's just this shadoqw cast over it bythis rate. It's a bit Pandora's free service lets listeneres create personalized streaming radio stations and discoverd new music by recommending songsd and artists similar touser requests.
The Oaklande company launched its consumer sitein 2005, after five yearsw of technical development, deal-makint and business-model changing. In July, Pandora landed its fourtu round of fundingfrom , and , adding an undisclosexd amount to the $30 million already Its ad-based business model brought in less than $10 milliohn in the last year, and in Aprik CEO Joe Kennedy said the companyu would be profitable in two to three yearzs if royalty rates remain unchanged. The company won't comment on futurw revenue, but its list of top-shelf advertisers continuesz to grow.
Westergren said it recentlty addedGeneral Mills, Honda and Those companies are aiming for Pandora's 9 million registeres listeners, a devoted group growinhg by more than a half million people a monty -- all by word of mouth. The compang doesn't advertise. Pandora just pushed AOL from its percnh asthe world's second-largest online radio statiom behind Yahoo, according to ComScore Mediqa Metrix. this month became the secone wireless carrier tobring Pandora's music to its headsetds for a small fee; Sprint signed on in May. and Sonosd stream Pandora to their in-homew music players, and Facebook users can link their personal radio stationds to their ownweb pages.
The compan y has also launched a set of features that allow userz to connect with other listeners who have similar musical tastes. The 120-person firm has added about a dozehn employees in the past six months and is lookin g to add 10 in the coming particularly inad sales. But since July, Pandora has been in A ruling from the CopyrightfRoyalty Board, an arm of the Librart of Congress, hiked music licensing fees for web radioo broadcasters, tripling Pandora's costs.
, the group that collecta royalties for therecordingv industry, argues that the new, higher royalty ratesa will ensure that musicians are paid fairly for their work as the music industry shifts its focusd from traditional media to the Internet. Recorxd labels and recording artists don't receivre any royalties from traditionalbroadcast radio, which is requiredc to pay only composers and Opponents argue that the new rates are disastrously high and will bankruptr most Internet radio broadcasters. Pandora is negotiating with SoundExchange and paying the new fees as it hopesz for a reprieve andretroactive reimbursement.
Said SoundExchange's Executivs Director John Simson, "We'll have a proposalk in a week to 10 These are licensees who payus royalties. We want them to stay in I'm a Pandora user myself."