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The Pandora Issue: What To Make Of It

If you’re paying the least bit of attention to the music industry, you’ve probably heard a lot of heated rhetoric lately swirling around music streaming service Pandora. In case it all sounds a bit confusing, here is the gist of the argument: Pandora feels it’s paying an unfair amount of royalties to artists, while artists feel they aren’t being paid enough.

Right now, the gulf between Pandora and the artists whose music it plays seems pretty wide. Let’s try to break down the highlights of the argument as they stand.

 

  • Pandora recently petitioned the government to look at changing the way royalties are paid to artists, so it doesn’t have to pay as much in royalties. Pandora claims that the way things are currently structured, the typical Internet radio outlet pays about 7.5% of its revenue in royalties annually, while Pandora says it paid out over 50% of its income in royalties last year.
  • Of course, this riled the musicians, who NEVER want to hear that they might be paid less. Pink Floyd members went public with a sizzling op-ed in USA Today attacking the streaming service for wanting to give artists an 85% pay cut. Musician David Lowery of Cracker and Camper van Beethoven posted a pic of his royalty statement from Pandora, claiming that he made a measly $16.89 off of 1 million plays on Pandora.
  • Pandora (more specifically, founder Tim Westergen) retorted this week that much of what was being said about the service was falsehood, that they would never support an 85% percent pay cut for artists, and that their current payout for 1 million plays was $1370, not $16.89. Westergen cited some number crunching from blogger Michael Degusta as proof.

So what is all this he-said-she-said stuff about? From one perspective, Pandora actually has a point. As they point out, a “spin” on their service reaches only one person at a time, while a single “play” on Internet radio reaches potentially millions of listeners at once—yet both are charged the same amount of royalty. Hardly seems fair. (Although even Degusta demonstrates that David Lowery’s portion of the $1370 should have been around $234—so there’s that discrepancy to consider.)

The truth is, it’s just too early to tell where this is all going to land. It’s widely believed that streaming services like Pandora and Spotify provide a meager substitute for actual record sales when it comes to artist royalties, so naturally Pandora’s request to pay even less is going to ruffle some feathers. It raises the questions: how much is fair? And if the move to streaming services means less money for artists, how will they ultimately survive?

My take? Like every other upheaval in music industry history, I think this issue will eventually find equilibrium. These are “growing pains” of a rapidly changing music industry. I think at heart everyone wants artists to be paid fairly for their work; it’s understandable that the outlets providing the services want to make some profit, too. We’ll have to wait and see where the numbers actually land, but if streaming is the wave of the future, a balance that is mutually beneficial to artists and providers will have to be reached. There is no alternative; necessity is the mother of invention.


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About the Author

on MUSIC IS MY OXYGEN WEEKLY.

David Tillman is an independent composer/arranger whose primary work involves writing jingles for commercials for radio and television, with several film and television placements to his credit as well. David has a fascination for all things related to the music business and the music industry in general, an obsession which his wife finds to be mildly unhealthy at times. His personal tastes in music are in electronica and industrial rock, and include The Chemical Brothers, Daft Punk and Nine Inch Nails (he loves that Trent Reznor is writing soundtracks!). When not in his office or in his man-cave, David enjoys skiing, hiking, the occasional game of golf, and sometimes just lounging by the pool. David lives with his wife and three children in Los Angeles, CA.

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