Here’s the deal: Pandora is an internet radio station. As such, it is governed by the DMCA. Yep, the same DMCA that makes it illegal to rip a DVD you own so you can watch it on your phone also has provisions regarding internet radio. The clearest outline I have seen of the restrictions is at Live365, where they describe the restrictions they have to enforce on your broadcast because of the DMCA.

Here’s two that really hit Pandora (and Launch, and even Rhapsody when you’re listening to their streaming radio stuff instead of their on-demand stuff):

Your program must not be part of an “interactive service.” For your purposes, this means that you cannot perform sound recordings within one hour of a request by a listener or at a time designated by the listener.
In any three-hour period, you should not intentionally program more than three songs (and not more than two songs in a row) from the same recording; you should not intentionally program more than four songs (and not more than three songs in a row) from the same recording artist or anthology/box set.

And what kills me and disappoints me about Steve is that he essentially said, “Why do they keep playing other artists when I only want to hear the one I started with. Their whole genome thing is stupid.” Holy cow, he missed the whole point of their service AND the fact that the reason why they operate that way is that they are legally required to do so.

Steve’s comments about business model were very good, though Leo’s point that their business model DOES work under current fee structures is really the important one. I usually love what Steve brings to the table, but he really let me down on this one, and I hope he revisits this issue with some vigor, either here or on TWiT.

Now I’m going to listen to this episode of the Gilmore Gang (my first) and see what he had to say on this one. While his interpretation of their service was way off, hopefully they talk about more business stuff with Pandora and internet radio in general. The whole copyright model needs to change, and it is silly that terrestrial radio pays one set of fees and internet radio pays another. Let’s see what the gang has to say…