James Cridland's blog

A radio futurologist writing about what happens when radio and new platforms collide
This is an archive post from my old website. Not all links will work. For new posts, visit my main writing index.

« | Blog index | »

Pandora: why they aren't in the UK

Posted on Monday, April 2nd, 2012 at 5:59 pm. #

Moderately rare money - a hundred patacas

Tim Westergren’s piece the other week in paidContent was an interesting one, since it (albeit with some very dodgy statistics, and a disappointing attempt to slag off the entire UK radio industry) tried to claim that PRS’s fees were unrealistic. He said:

“PRS’ demands effectively deny songwriters and artists a new income stream and deny U.K. consumers access to services that would enable them to discover and enjoy music they love.”

Of course, Tim knows that it’s not just PRS, but PPL who you also need to talk to. PPL represent the record companies, PRS represent the musicians and songwriters. And I suspect it’s not just PRS who’s “demands” are a litte high.

PPL tell me that “0.0796 pence per-track-per-stream was the published rate of PPL’s Customised Webcaster Licence in 2011″. They don’t publish this figure online. PRS’s website quotes a rate of 0.065 pence per-track-per-stream. So, if you were running Pandora in the UK, you’d pay a total of 0.1446 pence per track played on music bills. According to a Twitter conversation, 15 songs would be a sensible amount of songs to play per hour, assuming a light ad-load and no presenter or news. So, an hour of Pandora would cost them, on their PRS and PPL bill, 2.169 pence per listener, per hour.

The RAB have published that commercial radio annual revenue based on Q4 2011 was £532.5m. RAJAR reports that Q4 2011 had a total of 479,856,000 hours per week spent to commercial radio; or 25,021,062,857 hours a year. So we can work out that commercial radio revenues are 2.128 pence per listener, per hour.

Our commercial radio industry is excellently run against a strong (and commercial-free) BBC. It has existed since 1973, and is in growth. It has nearly 40 years experience in talking to ad agencies and is an integral part of the media spend for Britain’s biggest brands. It has tremendous scale, reaching 63% of the population a week: it’s larger than any online service (by comparison, BBC.co.uk, the UK’s largest website, reaches 41.8% of the population a week).

Yet to run a service like Pandora online, the UK music rights bodies would like more money in music fees than the entire radio industry earns in total revenue. And that’s before Pandora have paid for any staff; for bandwidth; for marketing; or tax.

Tim might have got his statistics hopelessly wrong; and might have disappointingly slagged off the UK radio industry in order to make a point. But his central argument – that the UK music rights bodies are charging too much to make a viable service – would seem to be absolutely right.


Frankie Roberto
commenting at April 2nd, 2012 at 6:23 pm

I was making this point to PPL and PRS 5 years ago when trying to negotiate licence fees for an Internet-only student radio station. Those rates just aren’t viable. Plus, they make it much harder to scale than if there were fixed costs (as every new listener brings increased costs).

One way for Internet radio stations to reduce costs though is to play longer tracks (like classical music) and to include a good proportion of non-PPL repertoire (unsigned bands and so on) in your playlists.

Jimmy Buckland
commenting at April 2nd, 2012 at 7:47 pm

Pandora’s problem is that it is a technology company whose technology is replicable and whose content belongs entirely to someone else. Music isn’t just one of a number of production inputs as with radio, it is the sum total of the production. And because Pandora does not shape or build that content in any way, its service is generic.

Paul Easton
commenting at April 3rd, 2012 at 8:08 am

There’s also a major difference between music licensing for online-only services and ‘conventional’ radio stations streaming their output.

Commercial radio stations pay a percentage of their ‘net broadcast revenue’ to PRS and PPL for a ‘blanket licence’ which covers all broadcasting platforms. It is not ‘pay for play’. The BBC pays an annual lump sum.

Internet stations do not have the option to have a blanket licence but have to pay per-track-per-stream.

That’s been a bone of contention for many years and much of that could be because commercial radio, through RadioCentre and its various predecessors, has had the necessary collective clout – and the ability to mount expensive legal action through Copyright Tribunals in the 1980s/1990s.

There is no similar lobbying organisation representing the interests of online broadcasters and music services – probably because the majority of such stations tend to be run by hobbyists and/or have no viable revenue stream. There have been some attempts in the past but they have tended to lack any real credibility.

James Cridland
commenting at April 3rd, 2012 at 11:22 am

Paul, you make a valuable point.

It might be useful for readers to know that the cost for much of commercial radio is around 8% of revenues – so commercial radio spent around £42m on music last year. [see below]

Clive Dickens
commenting at April 3rd, 2012 at 1:08 pm


Most Commercial Stations, due to ownership, now fall into the higher NBV bracket so pay 10.5% of NBV revenue.

James Cridland
commenting at April 3rd, 2012 at 1:17 pm

Clive – facts, schmacts. Didn’t know that. Thank you.

This is an archive site, and comments are now closed.