Pandora and the music industry are currently squabbling over royalties. Pandora, obviously, would like to pay less; the music industry would rather they paid the same, and radio stations paid more. And they’re starting to get a little angry that musicians are objecting to Pandora’s stance on paying them less.
To be fair, Pandora is right in that, well, the RIAA is not exactly the most honest and trustworthy of bodies. On the other hand, it’s hard to take Tim Westergren, Pandora’s chief strategy officer and a co-founder, seriously when says this:
The first falsehood being disseminated is that Pandora is seeking to reduce artist royalties by 85%. That is a lie manufactured by the RIAA and promoted by their hired guns to mislead and agitate the artist community. We have never, nor would we ever advocate such a thing. I challenge the RIAA to identify a statement from Pandora that says we seek to reduce royalties by 85%.
What’s wrong with that? Well, here’s how music royalties, specifically for Pandora, work:
- Pandora plays a song.
- For that play, Pandora pays royalties to SoundExchange for the public performance rights and to composers for the publishing rights.
- SoundExchange pays the royalties directly to the featured artist and the label.
The public performance rights for the sound recording are the majority of what Pandora pays out in royalties. Pandora has also backed a bill called the Internet Radio Fairness Act, which seeks to put their royalties more in line with terrestrial radio’s. Keep in mind, terrestrial radio gets a “blanket license”; they don’t have to pay a musician at all for playing their music. If you hear that Daft Punk remix on the radio, Daft Punk isn’t getting a nickel out of that.
So essentially, Pandora wants to pay artists less money to play their music. That may not be an 85% cut in royalties, but it’s a pay cut, and nobody thinks it’s the labels who are going to take the brunt of it if it happens. It’s more than a little dishonest to act like you’re not going to ding anybody’s wallet when that’s precisely what you want to do. Honestly, Westergren really doesn’t help his case by saying things like this:
The value of a spin on Pandora is about much more than royalties… radio has, and will always be THE primary means of promotion for artists. Spins means audience, and developing an audience of patrons is THE key to long-term sustainability for artists.
To be honest, every musician has heard this rap. So has every writer, every graphic designer, every visual artist, anybody who’s creative. Basically, it’s the wordier version of an ad you see in the “gigs” section of Craigslist: “We can’t pay you anything, but you can add it to your portfolio and get valuable exposure!”
It’s true that there needs to be a realistic discussion of how artists get paid in a digital world. But it doesn’t serve anybody to be disingenuous about it. Pandora should be more honest about how their policies might affect musicians, especially since music streaming is about to become a very, very competitive industry. They’ve got a chance to do right by musicians, and they should take it.