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Internet radio star Pandora gets new funding deal
2009-07-13
OAKLAND, California (AFP) - Popular Internet radio service Pandora on Monday confirmed it is getting millions of dollars in new funding in the wake of clinching a deal on music royalty rates. Greylock Partners is investing a reported 35 million dollars in Pandora, which is based in the city of Oakland across the bay from San Francisco. "The team at Pandora is really passionate about music and they have worked hard to provide people a great online listening experience," said Greylock partner David Sze, who spearheaded the investment. "Pandora has reached some impressive milestones, including a user base of 30 million registered users, and it is growing faster than ever. We are really excited about working with the company to help accelerate that growth." Sze has led Greylock investments in hot social networking service Facebook, news aggregation website Digg, and business-related online community LinkedIn. Pandora and Greylock would not discuss the exact amount of the investment, but neither disputed a 35-million-dollar figure reported by financial news website PEHub. "New funds will be used toward the continued growth and development of Pandora," the firm said in an email response to an AFP inquiry. Greylock joins a roster of Pandora investors that includes Hearst Corp., Crosslink Capital, Walden Venture Capital, Labrador Ventures, King Street Capital, DBL Investors, and Selby Ventures. Confirmation of the Greylock funding deal comes just days after Pandora founder Tim Westergren announced a long-term agreement regarding royalty rates for tunes played online. "For more than two years now I have been eagerly anticipating the day when I could finally write these words: the royalty crisis is over!" Westergren wrote in a message to users at the company's website. "Pandora is finally on safe ground with a long-term agreement for survivable royalty rates." The deal with webcasters, artists, and record labels staves off a virtual death blow that could have been dealt to Pandora by a "calamitous" Internet radio royalty ruling" by US regulators in 2007, according to Westergren. Two years ago, the US Copyright Royalty Board set a new fee structure for Web music broadcasts that Westergren and other Internet radio proponents decried as ruinous for the business. Westergren described the freshly negotiated royalty rates as "quite high" but manageable. He said Pandora will have to control costs by limiting users to 40 hours each of free online music listening monthly. Users will be given the option of paying a flat fee of 99 cents in any given month to continue listening past the 40-hour play limit, according to Pandora. "In essence, we're asking our heaviest users to put a dollar (well, almost a dollar) in the tip jar in any month in which they listen over 40 hours," Westergren said. "We hate the idea of limiting anyone's listening, but we have no choice but to react the economic realities of the new rates." Pandora already offers paid premium upgrade accounts with added features. Westergren called it unfair that Internet radio services pay higher royalties than any other form of radio.
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