“We are pragmatic and recognize the low probability that Congress will address this issue in the near term,” Pandora co-founder Tim Westergren said in a statement.

The decision is being hailed as a victory by the music industry, which has waged a high profile campaign against the law, and where some have blamed streaming services like Pandora for a decline in their income.

This view may not be fair, however, given that Pandora reportedly pays 70 percent of its revenue to obtain licenses from both songwriters and performers. By contrast, companies that deliver radio via satellite or cable services pay a lower rate under two separate licensing regimes, while traditional AM/FM radio stations must only pay the songwriters — they don’t pay the performers at all. (Billboard has a more detailed breakdown).

The confusing patchwork of royalty rates is partly the result of political pressure from the traditional music industry, which is anxious to make up the revenue it is losing from a decline in CD and record sales.

For Pandora, the failure of the Internet Radio Fairness Act could place it in a tough spot when its locked-in licensing rates from the major record labels expire in 2015. It must either obtain rates from the Copyright Board, which has set high rates in the past, or negotiate directly with the labels, who aren’t necessarily fond of Pandora.

The situation is different for other online radio services, including Spotify, which is paying individual bands based on its subscription service, and Apple, for whom licensing fees for its new iTunes Radio are a pittance relative to its overall business.

For music lovers, however, the failure of the Internet Radio Fairness Act could result in more expensive music or less selection.

(Correction: this was story was updated on Tuesday morning to note that Tim Westergren is Pandora’s co-founder, not CEO)

“[R]ailing against Spotify is about as helpful to their cause as campaigning against the Sony Walkman would have been in the early 80s. Music fans are increasingly streaming their music and, as artists, we have to adapt ourselves to their behaviour, rather than try to hold the line on a particular mode of listening to music.”

Bragg also takes issue with analog-era record deals that have carried over to the digital era. He notes that such deals, which give the lion’s share of revenue to music labels, no longer make sense in the digital context where labels don’t do any of the distribution or other “heavy-lifting” that once justified their cut of the proceeds.

These observations by Bragg (whose music, incidentally, celebrates fair wages and the working class) are a welcome dose of common sense at a time when other musicians have been treating the likes of Pandora and Spotify as scapegoats, even though the streaming companies pay higher royalty rates than traditional radio stations to reach fewer customers. For now, it makes more sense to focus on the role of the middle-men and to reconceive the industry’s business model at a time when movies and music are disappearing as a physical product.

Image by discpicture via Shutterstock.

From Billboard:

“The service, designed with mobile listening in mind, will have a free component and a premium tier that offers unlimited access to a full catalog of tracks similar to what’s already available via YouTube’s parent company, Google Inc., via its All Access subscription music service. Premium features would include the ability to cache music for offline listening and removing ads.”

The good news for YouTube is that it already has the licenses it needs for a service like this. Google launched its own music subscription service, Google Play Music All Access, in May, and the licenses it obtained for that service were also for YouTube.

So, what would set YouTube’s music service apart from myriad competitors, including not just Google’s own service but also Spotify, Pandora, Apple’s iTunes Radio and Rdio’s new offering? The videos are one obvious answer: Billboard’s report is unclear on they will be included in the service, but perhaps users would have the option of streaming a video while a song plays (though that would be tough to do and not that useful if you’re listening on the go). The article also mentions that “there are strategic reasons for developing a premium music video service that could be paired up with other Google products in the future, including Google Glass.” (Well, that would solve the watching-while-you-walk problem.)

Beyond that, Billboard’s sources mention full album streaming, offline caching of both songs and music videos and no ads. YouTube’s already started experimenting with offline video; starting in November, creators will have the option of adding offline viewing to their videos.

Nonetheless, the space is crowded. In addition to the services that have already launched, a human-curated offering from Beats is on the way too.

Now, though, the debate is taking a new direction as Pink Floyd’s drummer (and one of the signatories to the letter) appears to have had a change of heart about streaming music services.

“Streaming .. is beginning to look like it might work for the artist.. Initially, streaming was seen as a form of piracy but it’s beginning to become a commercial possibility,” Nick Mason told an audience on Thursday at the Wall Street Journal’s Tech Cafe in London.

As some have noted, Mason’s words may not be such a surprise given that Pink Floyd signed a deal with Spotify in June; in the Journal interview, Mason referred several times to Spotify but not to Pandora. (Pink Floyd’s music label, EMI, signed a deal with Spotify in 2011 but did not include the band’s catalogue).

Other comments by Mason suggest he believes musicians’ struggle to make money lies more with record companies and the structure of the music industry, rather than technology. He pointed out that its hard for new musicians to climb up the traditional ladder when the bottom rungs simply aren’t there anymore; Cracker’s David Lowrey, another strident Pandora critic, has made the same point.

But what about solutions? Mason suggested more musicians should sit on copyright and royalty boards to oversee how the money flows; it’s a good idea, and one that will help prevent an ongoing pattern of theft by middlemen. He added that the industry as a whole can embrace Spotify and other streaming services in a way that directs more money to musicians:

“I would like to see 50-50 between the recording company and the artist and an increase in the amount of streaming.”

Mason also observed that music fans, in an era where recorded music is cheap and everywhere, have come to value live performances more than ever, meaning concerts and merchandise are musicians’ best bet to earn money.

Many musicians, of course, will be quick to point out that, unlike Pink Floyd, they can’t make a living from concerts. But the idea of trying to build a new economic eco-system to support music, rather than trying to recreate an outdated one, appears more promising than simply lashing out at technology.

Clarification: This story was updated on Thursday afternoon to refer to Pink Floyd’s deal with Spotify.

In a ruling handed down in New York this week, a federal judge said an agreement between Pandora and ASCAP, which clears rights for the music industry, remains in force even though major labels like Sony and EMI are trying to withdraw new media rights.

The music labels want to continue to let ASCAP license the music to traditional markets like FM, but want to license their catalogues on an a-la-carte basis to digital music services.

The judge, however, said that a five-year deal that Pandora reached with ASCAP in 2010 still holds, and that Pandora can enjoy the benefits of all the rights it obtained at that time, and that the license can’t be narrowed after the fact.

According to Reuters, the decision could strengthen Pandora’s hand as it squares off with the music industry in a December trial over what constitutes “reasonable” royalties.

The upstart music service is in a bitter political, legal and public relations battle with musicians and the music industry. Pandora claims that it’s at a business disadvantage because it must pay royalties that other radio providers do not, and is lobbying Congress to lower the rates. Bands like Pink Floyd and the music industry, which is reeling from declining CD sales, accuse Pandora of chiseling musicians. For details, see our explainer “Pink Floyd vs Pandora: what the fight’s about.”

But this is really hard to pull off, because services like this need enough books to make the prospect of paying a flat fee for them palatable. Publishers are reluctant to sign up their titles, in part because of the difficulty of paying authors when their books are viewed this way. So you have services like Amazon’s Kindle Owners’ Lending Library, which contains over 400,000 titles — the vast majority of them self-published stuff that you have never heard of.

When I first heard about the New York-based startup Oyster last year, I was extremely skeptical. Backed by Peter Thiel’s Founders Fund and founded by former Hunch, Google and Microsoft employees, the company claimed last October that it would be the Netflix of ebooks. Then we didn’t hear much from it for nearly a year. I pretty much assumed the founders hadn’t been able to pull it off and I was not surprised.

I was wrong, though: On Thursday, Oyster launched on iPhone with over 100,000 in-copyright ebooks (i.e., not free public domain stuff) that users can access for $9.95 a month. It’s currently invite-only, and I’ve been testing the app for about a week now. The books are good: Real stuff you’ve heard of, from real publishers. The app’s design is fabulous: It looks and feels like a real app designed by a real tech company. Oyster isn’t perfect, but it actually delivers what it promises, and I recommend giving it a try.

First things first: How’s the content?

The app’s design is important, but if the content isn’t there, a service like this won’t work. So the key thing is that Oyster has the books: Over 100,000 in-print titles, plus public-domain titles that are not included in that 100,000 figure.

A warning: You will not find hot new bestsellers here. But you will find real books that you have heard of, published within the last decade, from publishers that you have heard of (if you follow that sort of thing). A sampling of the books available: Water for Elephants by Sara Gruen, Life of Pi by Yann Martel, The Best American Short Stories 2012, Tolkien’s Lord of the Rings and The Hobbit, Interpreter of Maladies by Jhumpa Lahiri, The God Delusion by Richard Dawkins, In Sunlight and in Shadow by Mark Helprin, Shutter Island by Dennis Lehane, Everything is Illuminated by Jonathan Safran Foer, Predictably Irrational by Dan Ariely, Just Kids by Patti Smith.

Publishers participating — i.e., making at least a few titles available, not their whole catalogs by any means — include HarperCollins, Houghton Mifflin Harcourt, Workman, Algonquin, Melville House, Rodale, Open Road, RosettaBooks, F+W Media and self-publishing distributor Smashwords. You’ll note that HarperCollins is the only big-five publisher on that list, though Oyster says it’s in negotiations with all the big guys. As for Smashwords, if you were wondering if Oyster is filled with self-published stuff you have never heard of, it isn’t: You can find a specific Smashwords title if you are looking for it, but Oyster will only feature select Smashwords titles on its home screen (as it only features select titles from other publishers).

Oyster wouldn’t get into details with me about how it’s compensating publishers and authors, and wouldn’t state whether newer, more well-known titles are getting better royalties than older ones. CEO Eric Stromberg told me, “We’ve had the benefit of other seeing other types of access models like this, seeing where they have done things the right way and where they tripped up, and structured our model in a way that is beneficial to content owners.”

Thank goodness for offline reading

If you want to watch a movie on Netflix while you’re on a plane, you’re screwed: You can’t download it for later. With Oyster, however, after you add a book to your reading list, you can access it offline. You only need an internet connection to download new titles. That’s awesome.

The app’s design is fabulous

The iPhone app is crisp, clean and intuitive to navigate. You can tell that it was designed by folks with a serious tech and mobile background: Cofounder and chief product officer Willem Van Lancker was a lead designer for the Google Maps iOS app. In my pre-launch tests, the app never crashed or froze up.

Oyster’s home screen offers Netflix-style browsing, with books’ covers arranged in rows in categories like “New & Noteworthy,” “Award-Winning Fiction,” “Book to Blockbusters” and “Popular Science.” To delve deeper, you can browse by genre (history, fiction and literature and so on) or search by title or author. When you see a book you want to read, you can either press a “play” button to start reading right away or press a little “+” icon to add it to your reading list.

When you start reading a book, you can adjust the type size and screen brightness or select one of five typographic “themes” that change the font, line spacing, colors and textures of the reading screen. “It makes it a little bit more human and less geeky,” Van Lancker told me. It’s a small, pleasing thing that’s just one example of the close attention to detail in the app’s design.

There are discoverability and social aspects, if you care about that

Just as I don’t usually care what my social network is watching on Netflix, knowing what my social network is reading is not a must-have for me in an app like this. Oyster does have social features: You can follow other users, see what they’re reading and recommend books to them. But the social features don’t overwhelm the app, and you can ignore them if you want to. That’s especially early on, when I don’t know anybody who has actually signed up to use Oyster yet.

Oyster does have a recommendation algorithm, but it’s not a big part of the app at launch. “As we gain insight into the preferences and activity of readers as well as the similarities among books, recommendations will become more highly personalized and will change over time,” Stromberg told me. To start, though, the company is relying on human editors to curate featured sets of books and titles.

Now for the not-so-good

Oyster’s largest limitation is platform: It is only available on iPhone at launch. Stromberg told me that he’s particularly bullish on mobile reading because people have their phones with them all the time, and that’s why the company went with iPhone first. In some ways, I can see the logic of this: Having Oyster on iPhone first makes it easy to dip into and out of books while you’re in transit, and the fact that you don’t need an internet connection to read them (once you’ve added them to your reading list) really does make it easy to dip in and out.

That said, part of me thought it would have made more sense for Oyster to launch on iPad first. I think that most people do most of their serious book-reading at home, and at home, reading on a phone probably isn’t your first choice. It means that right now you can’t really curl up with a book through the Oyster app.

Regardless, you won’t have to wait too long for iPad: That app is coming this fall.

Android users may simply be out of luck: Stromberg said Oyster currently has no “concrete plans” to launch on platforms beyond iOS.

The good folk of Box Elder — nestled between the Black Hills and the Badlands — may wonder how their airwaves became the subject of a tussle between a controversial Silicon Valley company and the Washington-based ASCAP, a group that collects copyright royalties for songwriters. But in the larger fight over the price of music in the digital age, the dispute over Box Elder’s FM station makes a weird kind of  sense.

Recall that Pandora is lobbying Congress to lower the rates it must pay every time it plays a song via the internet to one of its 70  million listeners. The company says ASCAP is demanding unreasonable rates, especially as Pandora — unlike conventional radio stations — must pay not just songwriters, but also the musicians who perform the music. Pandora says the high rates make it impossible to earn a profit. Well-known artists like Pink Floyd, meanwhile, say Pandora pays next to nothing and is trying chisel musicians.

Into all this, enter Box Elder’s KXMZ-FM, which plays “Today’s best hits.” Pandora decided to buy the station to make a point about royalty rates but still needs the FCC to approve the purchase  – this is par for the course when a radio station changes hands.

In its objection to the FCC, ASCAP argues the purchase should be rejected on the grounds that it’s a cheap publicity stunt and because Pandora failed to disclose how much of the company is foreign-owned.

So what to make of all this? On one hand, ASCAP is right: The Box Elder purchase is indeed a publicity stunt, but that’s the point. As for the objections about foreign ownership (Pandora’s investors include funds in the Caymen Islands and Canada), those might be technically correct, but are still silly from a policy perspective.

Recall the reason for the FCC approval process in the first place: Radio spectrum is a limited resource, and the government wants companies that use it provide certain things in return. These things typically include a commitment to play news, public service announcements and so on. As for the foreign ownership rules, those help ensure that a hostile power, like the one in Red Dawn, can’t take over the airwaves for propaganda purposes.

This regulatory trade-off, in which companies get air wave access in return for certain conditions, is sensible. But in the digital age, when radio and TV access are not limited by spectrum constraints and information is everywhere, it is less critical to enforce. That’s why the fate of the FM radio station may be important to some residents of Box Elder, but it’s unlikely to make too much difference if Pandora or someone else owns it.

In the bigger picture, Box Elder is just a small symbolic battle in a great game that pits technological upstarts like Pandora and Spotify against a music industry still struggling to recoup lost revenue from CD sales.

While both sides have valid points — Pandora shouldn’t pay more simply because it’s digital, but musicians need a sustainable compensation system — the focus on technology may be misplaced. As a lawsuit last week from singer Aimee Mann reveals, the best way to ensure musicians get paid may be to focus on the inefficiencies created by the music industry middlemen who handle the payments.

Now, another part of the music industry is under fire. This week, songwriter Aimee Mann filed a lawsuit against MediaNet, a groups that acts as a broker and distributor for millions of songs.

In her complaint, the “Voices Carry” singer accuses MediaNet of failing to pass on a fair share of revenue when it licensed her songs, and of continuing to license the songs even after an agreement between Mann and MediaNet expired. According to Mann, the company failed to provide accounting statements and stopped paying royalties altogether after 2005 — except for a token $20 payment in 2013, which the singer rejected.

MediaNet, which was created by big music industry players and then sold to private equity, did not provide comment to the Hollywood Reporter, which first reported the story.

Update: Here’s the response from Frank Johnson, CEO of MediaNet:

“This claim on behalf of Aimee Mann is without merit.  MediaNet has had a license for her music since December 2003. We have been paying royalties regularly to her agents on her behalf.  MediaNet is a supporter of artist rights and copyright and has been since we launched in 2001. We expect this matter will be resolved.”

If the allegations are true, they will provide more ammunition to critics who say the sale of streaming rights — MediaNet’s speciality — is a raw deal for musicians. But in the bigger picture, the MediaNet affair looks like part of a long and unfortunate history of middlemen in the music industry who have exploited, or outright robbed, the musicians they’re supposed to represent.

This type of scandal is hardly confined to the US. In recent years, royalty collections societies have bilked musicians in Belgium, Brazil, Spain, France and elsewhere.

These scandals show how musicians’ financial woes arise not just from low streaming royalties, but from the complicated way in which music money is collected and distributed — there are numerous copyright collection levels, and each one involves transaction costs and the potential for abuse.

What this means is that, going forward, musicians can’t simply rail that streaming services should pay higher fees. They must also explain how to create a more rational system of payments to ensure they receive those higher fees in the first place. (This is the case even if, as one astute musician points out, Pandora and Spotify “aren’t record companies– they don’t make records, or anything else; apparently not even income. They exist to attract speculative capital.”)

(Image by  Ysbrand Cosijn via Shutterstock)

But a new app called Swell attempts to fix the podcast discovery problem, and is launching on Thursday with some major brand partnerships and a useful app for finding new things to listen to.

The app works very much like Pandora — you open it up, create a simple account, and then it begins playing different podcasts based on your interests. It remembers which ones you skip and which ones you listen to, and takes this feedback into consideration, adjusting what it gives you accordingly.

And so far, the selection of content is interesting and lively. At launch, Swell is announcing partnerships with NPR, American Public Media (creators of “Marketplace”), and ABC News, but it also includes content from podcasts in iTunes like the BBC, CBC, Comedy Central, TED Talks, ESPN and others. All of the content I encountered in the app was free, and it gives you unlimited skips and plays, as well as an offline mode for listening on the subway.

When I opened the app, it started playing a wide variety of shows about everything from the DOMA ruling, to the history of the Oklahoma City bombers, to an interview with Square CEO Jack Dorsey. I was able to flip past the shows I didn’t like, and ended up with a good mix of news and commentary. It made for the perfect radio experience while I was washing dishes or walking to work.

To be fair, if you already have your favorite podcasts and apps that you listen to, you might not find it as useful, but if you’re just looking for a good variety of shows you didn’t know about, Swell fits the bill.

Podcasts have benefitted dramatically from the rise in mobile over the past few years. Forbes recently wrote about the rise of the podcast and how it’s benefitted from smartphones and apps, but also pointed to the growing creativity when it comes to what used to be traditional radio. Ira Glass said recently that even as his radio audience has stayed about the same over the past decade at about 1.7 million people, podcast listening has gone from nothing to 800,000 new listeners. It makes sense that an app like Swell would try to capitalize on the growth and help people sort through the noise.

Swell’s CEO G.D. (Ram) Ramkumar was previously a founder and CTO at Snaptell, which allowed you to take photos of book or movie covers and connect to a store to purchase them. The company was acquired by Amazon in 2009. Swell has venture funding that is not yet disclosed, Ramkumar told me.

The episode is just the latest flare-up in a long-running rumble over royalty rates in the digital age. This should mean a sober debate on economics and policy — but this is the music industry, so instead we get lies, invective and propaganda from all sides. That’s why we’re offering a plain English Q&A of what the fuss is all about. (If you’re just here for Pink Floyd, skip to the end for a treat).

Update: Pandora founder Tim Westergen has written a forceful response, saying the recent attacks are an orchestrated campaign by the RIAA and that a number of the claims — such as Pandora advocating for an 85% pay cut — are flat out wrong.

Why is Pink Floyd attacking Pandora?

Roger Waters and his mates say that the internet radio service wants to trick musicians into supporting a law that will cut their income by 85%. The band and others like Cracker’s David Lowery claim Pandora wants to use their songs to get rich without paying a fair share. Specifically, the bands are mad that Pandora is promoting a law that would reduce the amount of royalties it has to pay whenever it plays a song.

What does Pandora say?

Pandora, which has around 70 million monthly users, is upset that it pays higher royalty rates than other types of radio services. For instance, unlike AM/FM stations, Pandora has to pay not just songwriters but also the musicians who performs the songs. And, unlike satellite services like Sirius XM, which pay a “fair return,” Pandora must pay “open market” rates as determined by a panel of questionable legitimacy.

The company also believes the music industry discriminates against it in favor of internet services like iHeart Radio, which is controlled by big radio incumbent Clear Channel. The royalty rate issue is a make-or-break issue for Pandora, which reported that 80 percent of its revenue last quarter went to content acquisition (Pink Floyd counters this is like a grocery stores complaining most of its income goes to food acquisition).

Why is this coming to a head now?

Last year, the music lobby beat back a proposed law called the “Internet Radio Fairness Act.” The legislation, championed by Pandora, would have created some consistency across a crazy patchwork of radio laws that set out different rules and rates for different types of radio technology.

But, as Billboard noted, the Radio Fairness Act isn’t dead — it’s just hibernating. The law was introduced too late in the legislative cycle to pass the last Congress, and so Pandora and others are likely ramping up to try again (and are using stunts like buying an FM radio station to get a point across). The Pink Floyd article, therefore, appears to be part of a larger PR strategy to undercut momentum for the law.

Is a new law the only way to resolve this?

The fight over the law is just one part of a multi-pronged battle that also includes the courts (where Pandora is suing one of the royalty collection societies) and an agency called the Copyright Royalty Board. Public opinion, shaped by the likes of Pink Floyd and Pandora’s volatile CEO, Joe Kennedy, will also have a hand in how all this turns out. Meanwhile, the stakes will only get higher as new players like iTunes Radio enter the internet market.

So who’s right — Pink Floyd or Pandora?

They both have a point. On one hand, it seems absurd that the royalty rate for a radio song should be different based on what sort of device it is played on: “Wish You Were Here” is great no matter if it plays on Pandora, Sirius or an old-school FM station. There seems to be no logical reason to discriminate against Pandora simply because it uses the internet as a delivery device.

As for the musicians, they are right to be concerned about dwindling royalties. The money they used to earn from CDs and records has dropped off a cliff and income from iTunes or Pandora is not making up for it.

Ultimately, this is a choice about how America wants to subsidize its musicians and other artists. On one hand, the multi-layered royalty system developed in the 20th century is not holding up well, and copyright law has become corrupt and over-extended — it makes sense to scrap parts of this system. But on the other hand, though Pink Floyd is doing just fine, it’s not clear if there is enough money in the system to support and develop young musicians.

The good news is that Pink Floyd and others are earning new revenue streams thanks to the likes of YouTube. Here they are playing “Echoes” at Pompeii (skip to the 3 minute mark — so good) :