I...was stupid.  I hate to admit it, but it's true. 

If there's one thing this blog has been about it's the idea that you need to think through your ideas.  When I grab a quote and then list why I think that person is wrong what I'm trying to do is get people to ask themselves "How could I be wrong?" before they make a post. 

A question I failed to ask a year ago when I wrote this post.  The meme at the time was "Pandora is close to death because the record labels are charging unfair amounts for their music"

(If you don't know what Pandora is I'm not going to tell you.  You need to head over to Pandora.com and try it yourself)

I took the bait.  I adopted the faulty premise that Record Labels wanted to kill Internet Radio and I went off in the wrong direction.  But I was off- base and this article, entitled "Pandora Tunes into $35 million", tells you why. 

Online radio network Pandora has raised $35 million in new VC funding, according to multiple sources familiar with the deal.

What’s particularly interesting here is that the new financing was signed while Pandora’s very existence was in jeopardy.

...

All of that changed earlier this week, when Pandora and other webcasters reached a new agreement with the recording industry. Under terms of the new deal, large players like Pandora will pay out either 25% of revenue or a per song fee that will increase each year (whichever is higher). Still sounds onerous compared to terrestrial radio – which pays zilch – but is still considered a big win for Pandora.

You see the record labels don't hate Internet radio, just the opposite in fact.  They realize it's becoming a bigger and bigger market.  Their "attacks" were bargaining chips in an attempt to get a better deal from Internet radio.  Better than they got from terrestrial and satellite at least (deals made before the advent of "purchase by song").  Just as Pandora's "going public with a threat of shutting down" was a counter move.

That's the point I missed (and in doing so forgot the very question I encourage everyone else to ask). 

Yes, the deal Pandora reached with the labels gives the labels a little more money from Internet Radio.  But that's just the Record Labels way of making a profit when Internet Radio rises.  The labels are preparing for a future with only Internet Radio which is why that little bit of money was so important to them. 

Which is why I don't think either side of the Labels/Pandora conflict is eager to kill of the goose laying the golden egg.  Which in turn tells you why Pandora can raise $35 million in a VC market that's otherwise asleep.