There has been a lot of hype this past week about Pandora and their unfair payments to artists. Both sides in this argument are skewing the facts in their favor, and therefore creating mass misunderstanding, leaving consumers and other musicians with music on Pandora utterly confused.
I cannot help but make the connection to the Pandora’s Box myth. Pandora used innovation and creativity to lead the way to a redefined music industry, one where consumers had access to millions of songs anywhere, but unleashed conflict. This finger-pointing environment is not healthy for innovation and progression in the music industry. We need to try to learn all the facts, look at the situation from both sides, and find a way to move forward together. As we move forward, musicians cannot deny the value in online radio – it enables music to reach millions of consumers and potential fans – and streaming companies would not exist without the music. Along with all the bad things, Pandora’s Box also held the spirit of hope.
Here’s a quick recap of a few of the major finger-pointing events that occurred this past week:
* On Monday 6/24, David Lowery posted a piece where he showed he made $16.89 on over 1 million Pandora plays. Never mind that the song actually grossed over $1300, David wished to make his point by highlighting his songwriting revenue only. The issue gets muddled when you realize he only pointed out his songwriting share, not his publishing share as well, and that his take is only 40% of the writing, which he can’t blame Pandora for. David didn’t hide this skewing of the data, but his headline-generating writing style got respected blogs like Gizmodo and AV Club to write articles making it sound like that’s all the money he made. This forced a round of retraction articles later in the week. I can get behind the reasoning David made in the article (to stop Pandora from suing PROs to lower rates) but by obscuring the issue, he weakened the overall position.
* On Wednesday 6/26, Tim Westergren had to acknowledge the growing blogstorm and post a response about how much they do indeed pay and how they are not trying to reduce rates. Tim also chooses words carefully to make Pandora appear more altruistic than they’ve been. By saying that Pandora has not advocated an 85% rate decrease, it makes it seem that they’ve not positioned for lower royalties. But what (former) Pandora CEO Joe Kennedy did do was advocate in front of Congress for the Internet Radio Fairness Act. In a summary by bill sponsor Senator Ron Wyden, the bill “would treat Internet Radio, for purposes of establishing royalty rates, in the same way that satellite and cable radio are treated.” Currently, satellite radio is paying 7.5% of revenue to royalties. Pandora has claimed they currently pay over 50% of revenue. Cutting 50% of their revenue down to 7.5% is an…85% rate decrease. While this bill may be dead, that doesn’t mean the 85% reduction is the result of an RIAA misinformation campaign.
* On Thursday 6/27, David Israelite, the President and CEO of the National Music Publishers Association (NMPA), entered his opinion about the misinformation campaign by Pandora. He cited figures from both the Lowery argument and an event the NMPA held the previous year highlighting the paltry royalties the songwriters are getting. As he puts it: “By any standard, this is unacceptable.” That’s not entirely true because all this suggests is that Pandora is not paying a fair rate instead of a fair market rate, which is a different beast. By not comparing Pandora’s royalties to anything, these rates will naturally appear low. But you need an apples-to-apples comparison to know if anything is truly fair or not.
OK, so what is the truth of this argument? We need to have this so we can move forward with actual intellectual discussions that are as fair as possible to all sides.
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