Can’t Pandora and Musicians Just Get Along?

In the spirit of compromise, both sides should agree on several points.

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Jared Newman / TIME.com

Most people are happy with Pandora as long as the music keeps streaming. But now, some very well-known musicians are hoping people will take notice of the company’s business practices, which the artists claim are harmful.

In an editorial for USA Today, the surviving members of Pink Floyd–Roger Waters, David Gilmour and Nick Mason–accuse Pandora of trickery. They point out that Pandora has been e-mailing artists and asking them to sign a “letter of support” for Internet radio, while neglecting to mention that one of the company’s major business goals is to reduce the royalty rates it must pay to songwriters and performers.

Specifically, Pandora has been lobbying Congress to change the way royalties are calculated for Internet radio, which is currently treated differently than satellite or terrestrial broadcasts. A bill introduced in Congress last year went nowhere, but Pandora may try again if it can muster the support of more artists.

“Fine print is one thing,” Pink Floyd’s members wrote. “But a musician could read this ‘letter of support’ a dozen times and hold it up to a funhouse mirror for good measure without realizing she was signing a call to cut her own royalties to pad Pandora’s bottom line.”

Pink Floyd isn’t alone in this fight. On the same day as the USA Today editorial, David Lowery of the band Cracker bemoaned the $16.89 he received in songwriter royalties for more than 1 million plays of the song “Low.” “Here’s an idea,” Lowery wrote. “Why doesn’t Pandora get off the couch and get an actual business model instead of asking for a handout from congress and artists?”

As a listener–both to Pandora and the musicians who are attacking it–I’m sad to see both sides fighting. The listeners lose if Pandora goes away, or if musicians take their ball and go home. (Technically, they can’t pull out of Pandora due to compulsory licensing rules, but some workarounds exist.)

So in the spirit of compromise, both sides should agree on several points:

Pandora’s Royalties Are Never Going Make Artists Rich

Despite 1 million plays over three months, David Lowery can’t even crack $20 in quarterly revenue on Pandora. Lowery argues that royalty rates should not be lowered further, but he’s actually undermining his point by showing how worthless Pandora is as a source of money in the first place. No one is arguing that Pandora should pay higher rates, but that’s what would have to happen for it to become a significant revenue source.

As Lowery himself points out, he makes more money by selling a t-shirt or two. But there’s a good chance Pandora can help out with that. By playing music the listener hasn’t heard before, it connects people to new artists, so they can purchase music, go to concerts and buy merchandise. Which brings me to my next point:

Pandora Needs to Be a Better Promoter

If Pandora’s argument is that it helps people discover new artists, leading to more money spent on music, concerts and merchandise, it’d help if Pandora actually did more to promote those things.

A couple examples of where Pandora fails in that regard:

  • You can’t look up your entire listening history on Pandora. The only way to save songs for future reference is to “Like” them, which isn’t practical if you’re driving, cooking or otherwise distracted.
  • Pandora doesn’t provide any concert information about the bands you’ve liked or created stations from, nor does it offer any opportunities to buy band-related merchandise.

Pandora does include links to iTunes and Amazon, but that’s just one thing the company could do to promote musicians, and it’s not particularly creative. Artists might not be so worried about direct revenue if Pandora was doing more to help them connect with listeners.

The Grocery Analogy Is Bogus

“[A] business that exists to deliver music can’t really complain that its biggest cost is music,” Pink Floyd writes. “You don’t hear grocery stores complain they have to pay for the food they sell.”

This analogy–seemingly borrowed from musician Blake Morgan–doesn’t make sense. For one thing, grocery stores do not rely on giving away free food to lure shoppers inside, where they must listen to ads and potentially buy more food at a premium. It’s a different business model.

Also, if the cost of food goes up, grocery stores can pass that cost on to the customer. Pandora’s only options are to enforce a listening cap, which it has done, or increase its number of ads, which risks driving users away and may not make up for rising royalty rates anyway.

Pandora Should Be Clearer About What It Wants

Got some time to spare? Here’s a fun challenge: Figure out specifically how much of a drop in royalty rates Pandora is seeking. I’ve seen estimates ranging from a 50 percent reduction (according to an analyst) to 85 percent reduction (according to dismayed artists), but nothing solid from Pandora, and no indication of whether other radio sources, such as satellite and terrestrial, should pay higher rates to balance the scales.

In a letter to Blake Morgan, Pandora CEO Tim Westergren said there’s been “a lot of misinformation put out about our intentions,” and claimed that Pandora has “no desire to lower royalties dramatically,” but he was vague about what the company actually wants. The fact that Westergren’s initial e-mail contained no mention of royalties definitely comes off as trickery. In that sense, Pink Floyd’s argument definitely has merit.

To put all this another way, both sides need to mellow out, man. Musicians should stop painting Pandora as an evil and unprofitable company that’s beloved by millions of users, and Pandora should be truer to its words about wanting to help those artists out. There’s got to be a way for Pandora and musicians to thrive. They just need to get along well enough to figure it out together.

8 comments
miller7mark
miller7mark

There's so much more to this argument. The creators of the music, the songwriters and/or publishers are the real losers in this battle. They are the owners of the music - the underlying copyright. All the attention goes to the artist and the label but the writer (who may or may not also be the performer) often goes nameless and is paid a pittance. It all starts with the song. Both the artist and the writer deserve to be compensated fairly for the commercial use of their work.

Titanus
Titanus

I like the idea of more artist promotion.  It would be nice as I do not seek out such information but would spend more money on the items if I knew of them.  An example would be Lalapalooza.  This year there are going to be a lot of the British groups my wife and I discovered on Pandora but we did not know of them all being in the festival and by the time we did find out the available tickets were too expensive.  That said, i would also listen to Pandora more if the commercials were not twice as loud as the music.  That is just a real pain and causes me to turn it off many times.

PaulDirks
PaulDirks

Pandora Needs to Be a Promoter

FIFY.

I've never been a fan of streaming ANY content since I prefer to own my music collection rather than rent it and if I buy a CD, I know the author gets paid. The bottom line is that the music industry totally missed the boat by waiting until piracy was rampant before introducing I-tunes. Fans WILL pay for content if they know it actually supports the artists. OTOH, if the artist is getting shafted then EVERYONE is getting shafted.

mahadragon
mahadragon

Please inform me if I am mistaken, but Pandora does not make deals directly with the music labels or even the artists themselves, but rather a conglomerate who then makes deals directly with the labels and artists. Am I right or am I mistaken? If Pandora does indeed contract with a conglomerate, then this article doesn't hold any water. From what I understood, Apple is the only company out of Spotify, Pandora, etc. that deals directly with the labels.

mew5175
mew5175

This article is written as if the author does not live in the real world. Pandora will SAY they do things to help the artist just for the hell of it. They aren't going to go out of their way to promote concerts and whatnot because they couldn't care less. Pandora is like any other business and they want to make money. They want to pay less money for music and get more advertising. There is no point in them going out of their way to do anything else.

The artists can complain all they want... if Pandora isn't doing anything illegal then there is no incentive to change. "Negative publicity" by the artists to bash Pandora won't do anything. This isn't like modern day slavery or anything. Nobody cares. If they enjoy the service they will continue to use it. Anyone who wants to support the artist can go and do that. Nobody is listening to Pandora to support musicians. Anyone who thinks they are helping musicians by streaming their music is a complete idiot. Most people understand that you have to actually make some sort of purchase such as a song, concert tix, merchandise etc to support an artist.

As we continue into the future, I think we will see less and less record companies. Musicians don't want to go through them anymore. They want to create the music, have all the rights to it and distribute it however they want... likely by selling it on their own websites. That is how they will be able to make the most of their music.

Musicians can use iTunes, Amazon and radio stations to promote their content. As more of this streaming continues to frustrate the artists, the importance of radio could once again rise as artists continue to move away from signing on with record labels. 

cliveklg
cliveklg

@miller7mark So a company that only became profitable in 2013, and just barely by going public (stocks) not from the music model, isn't bearing in risk?  


The article has a point in that the artists should be looking to get Pandora to let listeners look up what they listened to in a session(boon for new artists getting recognized), and have more links including the artists web pages, so listeners have direct links to their merchandising.  


That is where they are going to benefit far more.  Royalties are never going to work for a business model for artists on Pandora or Spotify.   

newmanjb
newmanjb moderator

@mahadragon You are mostly correct. Slacker Radio also cuts direct licensing deals. There may be others but I'm not sure. Anyway, I'm not sure why that means the article "doesn't hold any water." Pandora is trying to drum up support from musicians as it lobbies Congress to effectively lower royalty rates. (These rates are set by courts, but Internet radio pays more than other forms, which is what Pandora wants to have changed.) It's not about whether Pandora has the right to license music in the first place, but whether it can use the support of musicians to get the lower rates that it seeks.