A recent report about the music service Pandora and its upcoming plans was recently released, shining some light on Internet-based music industry, which might be a lot harder to handle than some might think. The piece, presented by the Washington Post, includes an interview with Pandora’s founder, Mr. Tim Westergren, who talked about the many problems encountered by his company.

Pandora started out as an automated recommendation and Internet radio service, quickly gaining huge worldwide popularity. Once a user listens to a certain song or to a certain artist, the service provides information about many other similar tunes. Users can then approve or disapprove the recommendations, which are considered by Pandora in its selections.

Mr. Tim Westergren explained that the company is "approaching a pull-the-plug kind of decision," as a direct result of the increases of royalty fees. At this point, the Copyright Royalty Board demands a fee of 8/100 of a cent for every single play recorded by a song, a price which can be supported by the company. The problem is that these rates are expected to increase up to 19/100 of a cent by 2010, putting the company in a serious tight spot.

Apparently, not even its huge user-base, now listing more than one million subscribers, can successfully cover the amounts requested, causing a significant money loss.

"We're losing money as it is," Westergren explained. "The moment we think this problem in Washington is not going to get solved, we have to pull the plug because all we're doing is wasting money."

It is expected that Pandora will not go down without a fight, as there are several ways of dealing with such a situation. Even if the problem will not get solved, the company’s officials will probably weight their options and give it one more go with the best available strategy before pulling the plug.