Why Pandora Is Running a Small Town Radio Station

KXMZ-FM in Rapid City, South Dakota, plays “today’s best hits,” hosts a weekly call-in with “Crazy Psychic Sheila” and is a typical small-town radio station except for this: it’s run by the world’s largest Internet radio company.

Pandora Media Inc., with 79.2 million users, paid $600,000 for the station on the doorstep of the Black Hills in hopes of saving millions of dollars in fees paid to songwriters and publishers for playing their music. Traditional broadcasters pay a lower royalty rate than digital ones and Pandora, with the purchase, wants to be assessed at that rate, too. The sale was completed last week.