Pandora’s Cool Hack of the System!

This week in the news it was announced that the Internet radio service, Pandora, had purchased a terrestrial radio station. Now, some of you may know that I’ve been in radio for a lot of years. As my gray hair might attest! In fact, I started on radio in 1976. And, I enjoy keeping up with the radio industry and the “ins and outs” of the introduction of new technologies into radio. One of the things that radio stations have to deal with is the licensing of music that they play. Most stations pay a BMI license which covers the songs that they air. This license is a business expense, but it’s not unreasonable. However, the structuring of this license is outrageous for online, or Internet-based, radio stations. So, Pandora has had to pay extravagant fees for the music that they air, unlike regular, terrestrial, radio stations. Is this fair? No, I don’t think so!

Which is why this week Pandora bought a terrestrial radio station! Clear Channel Communications owns a lot of terrestrial radio stations and they only have to pay the regular BMI license fees, even though they also do Internet broadcasting. So, in what could be considered a great “hack of the system,” Pandora bought a terrestrial radio station in order to pay terrestrial radio licensing fees for their music! How cool is that? Now, will they get away with it? I’m not sure. But while some are complaining, I say they’re working within the system! And at the same time alleviating and injustice to Internet radio stations. Or, at least making a statement about it. Because other Internet radio stations will continue to have to pay the exorbitant fees that are being charged for no other reason than that they are stations that air music on the Internet!

So if it works, I say, more power to them! And if it doesn’t, then I say, good try, Pandora! Either way this inequity of fees needs to be addressed… Just my two cents.