The Washington Post is reporting Pandora, the social radio station phenomenon, may be on the brink of shutting down.
The Pandora Radio iPhone app gets about 40,000 new downloads daily and is one of the most popular picks in the App Store (see our full review HERE).
While the application streams music to over 1 million listeners every day, an increase in royalty fees has the company rethinking its gameplan.
"We're approaching a pull-the-plug kind of decision. This is like a last stand for webcasting," said Pandora's founder, Tim Westergren.
While traditional radio pays no such fees, a federal panel doubled the going per-song royalty rate for streaming media in a decision last year. What's that mean for Pandora?
A whopping 70% of their projected $25 million in revenue will be needed to cover the costs. Apparently it costs webcasters 2.91 cents per hour, per listener, in royalties to stream such content.
A retinkering of their ad-structure, which currently only consists of spots on its Web page, is being retooled. To stay alive, Pandora will start running 'subtle' ads, according to Westergren, "Something like 'The next half hour is brought to you by....'"
Hopefully the non-intrusive ads will be enough to keep the Music Genome Project alive, profitable, and free of the advertisements we're used to hearing on traditional radio.
