All Your Face Are Belong To Us

Lots of churn on the interwebs about Facebook's new Terms of Service (TOS).  The new user agreement asserts an irrevocable, non-exclusive license for any content users add to the service.

The key change is that there used to be a clause about the user's right to remove content, and that's been removed.

It's probably not as sinister as many bloggers infer.  Because of Facebook Connect, content is being stored outside Facebook's span of control.  This new language absolves the service of liability if a user's content is misused elsewhere.  It's increasingly common on other social networking and search sites, including Google.

As ever, the prime directive of the net -- never post anything (including in email) that you wouldn't want to see on the front page of the New York Times tomorrow -- applies.  Discretion isn't just the better part of valor, it's a requirement in the neworked economy.

Royal Pain Relief

A royalty agreement has been reached between the creators of music and the internet radio industry that seems to have remedied the standoff between the two camps.  The recording industry, represented by RIAA and other groups, and the streaming content sites, represented by the Digital Media Association, have agreed in principle to a royalty of 10.5% of revenue for interactive streaming services.  The agreement has been sent to the Copyright Royalty Board for final approval.

This is a huge step forward for internet radio.  New royalty requirements (a 38% increase) for intenet streaming threatened to essentially cripple the fledgling industry.  The proposed royalty rate was higher than satellite radio pays.  Broadcast radio pays nothing at all.  Internet giants such as AOL and Yahoo considered abandoning their Web radio operations.

Tim Westergren, CEO of Pandora, the largest privately held internet broadcaster, was explicit that the new royalty rates would mean going out of business.  "At the new rates we're losing tons of money. If we don't think there's a real answer that's going to happen, it's our fiduciary responsibility to stop.''

And that would be a real shame.  Tim presented his business (then called Savage Beast Technologies) at the GCN 2003 East Bay Venture Capital Conference, and won "best of show".  Since then he's built his broadcasting platform to a $25 million business, although it's still not profitable.  Millions of listeners have become regular listeners of Pandora, which allows users to custom configure their own radion stations based on their musical preferences.

We're glad for Tim, and for Pandora, that cooler heads have prevailed and that the royalty structure will accommodate the infant industry while still making sure the creators of music are compensated.