Pandora Announces New Fees

One week after the new agreement was reached between Internet radio and copyright owners, Pandora Inc. received a new amount of funding from Greylock Partners, reports The Wall Street Journal . Although both Pandora and Greylock have not publicly disclosed the amount, media outlets estimate it around $35 million.

 

Although Greylock was initially unsure about online radio , the company soon realized its potential for becoming a great business. Before the new agreement, Webcasters were paying 0.08 cents per song, an amount that was set to increase annually, which would have made it hard for companies like Pandora that don’t charge its users. According to the article, Pandora reported that it was paying 70% of its revenue in royalties under the old agreement. Under the new agreement, Pandora plans to charge its heaviest users with a larger fee. Pandora users, who listen to the free Internet radio station more than 40 hours a month, will not have to pay 99 cents to continue listening for the rest of the month.

 

Pandora founder Tim Westergren told the Journal , “We realized that with this resolution that when you’re advertising-supported it’s harder to monetize a heavy listener.” He added, “It’s easy to monetize someone who listens for one hour, but harder for someone who listens for two hours or more. Advertisers pay for reach, not depth. This is just asking for a dollar in the tip jar.”

 

“I’m feeling really good now and about the prospects for the next couple years,” Westergren told the Journal . “We’ve reached critical mass, which is huge for us with the advertising business and the visibility to consumers.”According to Westergren, Pandora adds 60,000 new users each day.