Faced with the difficulties of earning revenue in the online music space, one service will begin playing ads and another will charge users for uploads.
Pandora, an Internet radio station that adapts to the listener's interests, is now playing a 15-second commercial after the first 10 songs played, then after every 20 songs. The current ad campaign is targeted towards specific listeners, so not all users will hear the ads.
On Tuesday, Pandora founder and CEO Tim Westergren told the California Press-Democrat that the website is experimenting with new ways to earn money. "Like any business we have costs, and we have to figure out a way to make it work," he said.
Internet radio's dilemma is made worse by higher royalty rates compared to regular broadcasting. One radio station in California paid $5,000 for royalties in 2007 but had to shell out $11,000 for online streaming, the Press-Democrat reported. After the new rates were implemented in March 2007, they almost sank Pandora.
A different kind of music website, iMeem, is also looking for new ways to scrape up revenue. It will begin charging annually to users who upload more than a certain number of music or video files. Unlike the changes at Pandora, iMeem's decision has nothing to do with royalty fees or music industry pressure.
The social networking site allows users to share music and video with friends and offers free online streaming. A new set of VIP packages range from $9.99 to $100 per year for uploading 1,000 to 20,000 songs and 10 to 500 videos.
"We will continue to experiment with new monetization opportunities if they add to the user experience," an iMeem spokeswoman told CNet.
Both sites' decisions have led to some negative outcry from fans. One iMeem message board user was considering leaving and abandoning efforts to evangelize the service. A Twitter user swore off Pandora entirely.
It just shows how the online media business can be such a double-edged sword. Consumers may gravitate to a site for the services it offers, but there's always a chance they'll pull back when the site devises a way to sustain itself.
