• TechCrunch, Wednesday, July 8, 2009 1:46 PM

A resolution has been reached that appears to have saved streaming Internet radio services like Pandora, TechCrunch and others are reporting today. The deal between Webcasters, artists, and record labels results in a 40-50% reduction in the per-song-per-listener rates that Webcasters pay SoundExchange, the organization set up to collect music royalties. In exchange, Pandora will either give up a 25% share of its U.S. revenues, or it will pay the new per-song-per-listener rate -- whichever is higher. The deal runs through 2015.

"Pandora is finally on safe ground with a long-term agreement for survivable royalty rates," Pandora CTO Tim Conrad tells TechCrunch. However, MG Siegler notes that because the rates agreed upon are still higher than other forms of radio, the music service is going to have to place limits on users of its free version. According to Conrad, this will only affect 10% of the company's user base, or those who use Pandora over 40 hours per month. Once a user hits that limit, they will have to pay $0.99 for unlimited service for the rest of the month. "Seems fair," Siegler says.

Will the new arrangement affect Pandora's goal to be profitable in the next year? Conrad doesn't think so. "It's a great outcome. Expensive, but I think we can still be profitable next year," he says. "These are workable rates."

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