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Streaming music service Pandora is stepping outside of their comfort zone with the recent purchase of a terrestrial radio station in South Dakota. There isn't a ton of money or potential in a traditional FM radio station these days so, what gives? As it turns out, it all comes down to money.
An agreement with the Radio Licensing Marketing Committee (RMLC) last year though the performance-rights group American Society of Composers, Authors and Publishers (ASCAP) gave preferential treatment to Internet properties that just so happen to own terrestrial radio stations. And by preferential treatment, I mean a discount on royalties owed.
That said, Pandora purchased KXMZ-FM out of Rapid City, South Dakota for an undisclosed sum in order to qualify for the same RMLC license and the same licensing terms as their competitors. According to Pandora assistant general counsel Christopher Harrison, at least 16 of the top 20 Internet radio services that compete with Pandora operate under the RMLC license that isn't available to Pandora.
To further validate their discrimination claims, Pandora points out that streaming service iHeartRadio (which is owned by Clear Channel) also owns a terrestrial station and qualifies for the discount.
Just to cover all of their bases, Pandora said they look forward to broadcasting their personalized experience in Rapid City, an area that already has some 42,000 Pandora listeners. They plan to apply their insight about listening habits in order to broadcast music that reflects local listeners' evolving tastes.