

Earbits (YC W11) on Robert Scoble's Building43 - earbitscom
http://www.building43.com/videos/2011/06/16/earbits-online-radio-focused-on-the-music/

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lowglow
Why doesn't Pandora make any money and how will Earbits model be different?

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earbitscom
Pandora relies on compulsory licenses provided by the government with royalty
rates that are set by the copyright royalty board. Those rates, unlike
royalties for publishing (which are a manageable percentage of revenue), are
on a per stream basis and they are set too high. So, every single song you
hear on Pandora costs them a fraction of a cent. It's one of the reasons why
they limit your usage and have restrictions against skipping too often, etc.

Combined with other royalties, overhead and the low value of display ads on a
radio site, it's next to impossible to turn a profit. And, the royalties are
set to go up several times over the next few years.

Earbits is different because we license music directly from the copyright
owners under our own agreement. Because we provide more value in the way of
merchandising real estate, upcoming live performance information and other
things that help the band (and label) build a sustainable "business" through
their radio exposure, they give us certain royalty waivers and let us use the
music in exciting ways to help drive awareness to the band. Our costs are
lower and our service is more flexible as a result.

We have no ads, no commercials and no skipping restrictions. That being said,
you'll only hear the music we have licenses for, but that hasn't stopped us
from adding half a dozen Grammy winners and numerous headlining artists to our
roster of 1700+ artists through 140 labels so far.

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lowglow
Thanks for the insight. I appreciate the reply.

