Online music service Pandora has signed a deal with a Clear Channel subsidiary to sell its ads.

“What this provides is a way to scale our ad-sales effort immediately,” Pandora head Tim Westergren told Ad Age “When you grow as fast as we have this quickly, your inventory gets ahead of you. Plugging into an endemic, national network of sellers is a great point of leverage for a company like Pandora that is experiencing hypergrowth. Over time, as we grow into our shoes, this relationship will naturally evolve.”

The Ad Age article also speculates that Pandora and Clear Channel may also be looking at a content partnership…because the one thing most people in the US need is Clear Channel on their Pandora stream as well.

Personally I was surprised to see Pandora still going; they haven’t broadcast outside of the United States for several years, and the rest of the world has moved on without them.

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Where are your lawsuits now, music industry?

Piracy was down by roughly a third in the UK in 2008, but streaming was way up in the same period. Savvy UK teenagers are using sites like Pandora, YouTube, Grooveshark and Spotify to stream content and music to their computers in lieu of filesharing. One former pirate and current streamer told the Guardian:

“I didn’t even realise it was illegal for a long time, until I heard that the government were trying to stop it. That did put me off, but one of the big reasons I stopped doing it was because I would get viruses, more pop ups on my computer. While I was at uni I started listening to streamed music using MySpace. Bands would be friends with other bands and it was a great way of discovering new music. I don’t really feel the need to own all that music, I know it’s always there.”

The shift seems largely inspired not by some moral obligation to maintain music industry profits, but rather, sheer convenience. As has been shouted at the music industry time and again, the business models that will flourish alongside technology are those that offer convenience and aren’t ripping consumers off left, right and center.

It seems that the music industry can accept that the entire revenue generating model has changed and change with it, using tangible merchandise like tour tickets, memorabilia and the like to boost profits alongside ad-supported streaming. Or they can continue to behave like litigious buggy-whip factories and keep trying to circumvent technologies that bring fans to music most efficiently. Which do you think it will be?

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LAUNCHcast Gets CBS Support

First up, Yahoo’s LAUNCHcast Radio: The company that’s been Yanged into the ground has announced it’s essentially handing off its online radio system to CBS Radio. The official phrasing is that CBS Radio “will power Yahoo Music’s LAUNCHcast Radio.” All of LAUNCHcast’s stations, however, will be combined with CBS’s. A new CBS Radio player will replace the Yahoo player on the Yahoo Music site. And CBS Radio will handle all sales related to the stations. As far as we can tell, CBS has all but acquired the thing. (Yahoo, presumably, will continue to take some portion of the profits.)

In any event, the move will create a combined 300+ stations and will add support for Firefox and Safari browsers. It’ll also bring some traditional stations into the LAUNCHcast mix, including New York’s WFAN, Los Angeles’s KNX, and Philly’s WPHT.

The change is scheduled to take place early next year.

Pandora’s Boom

The other news comes from Internet radio company Pandora. After a year filled with royalty-related woes, Pandora has some happy news to share: Its popular iPhone app has now topped 2 million users. Not bad for a company that had said it was on the verge of shutting down just a few months ago.

“Times, they are a changin’,” notes Pandora founder Tim Westergren.

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H.R. 7084, or the Webcaster Settlement Act gives webcasters an extension of time to negotiate lower royalty rates than those imposed on the industry last year.

The bill now goes to the Senate where certainly the forces of evil may indeed try to block it as Pandora and others have suggested, but with a unanimous pass in the lower house, it looks like half a decent chance of passing.

I’ve been strong in my criticisms of attempts to kill of the web radio industry in the United States in the past, and I fully support this bill, both as something important to the future of digital media, and as a daily internet radio listener myself. I also use to like Pandora, and as the first great automatic music recommendations service, I spent many hours on the site. And yet passage of this bill means nothing changes for the entire world outside of the United States for Pandora, because despite every single competitor I’m aware of being free to use outside of the United States, this is all I see on the site today, the same message I saw last year:

Apparently Pandora has different global licensing constraints than do other sites…and who am I to argue. However other sites battle to not only save webcasting in the United States, they also battle to save webcasting for a global audience. Pandora on the other hand remains georetarded.

The thing is, for most of the world, if Pandora died, we wouldn’t notice, nor dare I say it, would many of us care. For those outside the United States who care about the industry implications, the overboard alarmism by Pandora leading up to this vote doesn’t help their case either. Remember: no dissent, the bill passed unanimously, when Pandora cried wolf. There needs to be a concerted lobbying effort and this legislation needs to pass, but from what I’ve seen, Pandora perhaps shouldn’t be leading the charge, because you need to manage your grassroots carefully, where as Pandora just used up a whole lot of good will on the first battle, without yet winning the war.

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The ironic part is the the recording industry doesn’t need anyone’s help; it’s going to kill itself sooner or later if it continues on its current path. What entrepreneur in his or her right mind would want to launch a music app at this point? It’s a given that dealings with the RIAA and/or SoundExchange won’t be pretty, so why even bother to try?

If the RIAA has its way, every music app, with the exception of basic consumer sales sites like iTunes, will be gone. In its zeal to recreate the past with a sales model that had the labels rolling in money and the industry controlled by the complicated and often incestuous relationship between radio and the labels, the RIAA would completely eliminate the technology that could make even the long tail of recorded music profitable.

So what would be left? I know I’m not the only music fan who’s growing more frustrated that my tithe to the church of music is being overlooked, and that the sites where I’m finding all the great music that I buy are being shut down one by one. I remember Napster fondly as a site where I found tons of music I’d never have heard of without it. My iTunes library is legal, but many of those purchases were spurred by music I found on Napster, or last.fm, or Pandora. We know what happened to Napster, and it seems that at least Pandora may follow it.

What is the resort, then, for those of us who aren’t interested in the pablum being spoon-fed to us via Clear Channel here in the States? We’ll be forced to head underground to find new music, exactly the behavior that the RIAA claims it’s trying to stop. The U.S. and other countries will end up like China: a country whose music industry is so ravaged by piracy that recorded music is viewed as nothing more than an advertisement for live shows and merchandise.

At this point, the industry is faced with a choice: lay off the Draconian measures it’s using in dealing with online music services and find a model that benefits the artists and the Web services, or add more fuel to the bonfire of user revolt that could turn the U.S. industry into a wasteland of piracy.

Guest author Cyndy Aleo-Carreira is a contributing editor at The Industry Standard .

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