Music Business

FACT: Pandora Only Pays Songwriters 4% Of Revenues

PandorakeysOp ed by David Israelite, head of the National Music Publisher's Association.

In a New Year’s message to listeners, Pandora’s CEO called 2014 the “year of the working artist on Pandora.” He suggests that events last year were positive for those trying to make a living on his streaming site. Currently, Pandora is fighting major publishers and PROs to lower the rates paid to songwriters.

One of these things is not like the other. 

In reality, 2014 was the year of the music creator standing up to streaming on behalf of working songwriters. Not to mention, Pandora fighting tooth and nail in court and Congress to pay them even less.

Pandora’s CEO is quite literally banking on a few things. First, that music fans don’t understand recording artists and songwriters are paid differently – so by saying “artists” are treated well, folks will assume everyone is being compensated. Nothing could be further from the truth.  While artists and record labels receive a respectable 50% of Pandora’s revenue, songwriters receive only about 4%.

Second, he is hoping that fans won’t notice that Pandora has gone to court twice to sue to pay songwriters less.  Less, even, than the $2,700 in songwriter and publisher royalties earned from 43 million streams of Pharrell Williams’ “Happy.”

A far cry from the “year of the working artist,” the true hallmark of 2014 was that famous singer-songwriters said ‘no’ to streaming that treats songwriters unfairly.  Taylor Swift made news with her bold declaration against the degrading royalty rates paid by Spotify, saying, “I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music.”

Jason Aldean followed suit, declaring, “I’m an artist whose career has been built by the songwriters, publishers, producers and engineers that line Music Row in Nashville. What they do has value, and I want everyone who is involved in making my music to be paid fairly. This is about trying to do what is right for the people who have given me a great life.”

Luckily, Swift and Aldean, who are both songwriters and recording artists, have the ability to take a stand by pulling their songs from Spotify. Were they exclusively songwriters, they would have no choice due to decades-old government regulations.

Simply put, without big-name artists like Swift to speak for them, the songwriters behind the music often have a much a weaker voice. 

So why don’t songwriters get a fair shake from streaming? In the case of Pandora, while recording artists have some ability to negotiate their rates, songwriters have none.  As Aloe Blacc, the co-writer of Avicii’s hit “Wake Me Up,” said,

“by law, we have to let any business use our songs that asks, so long as they agree to pay a rate that, more often than not, was not set in a free market. We don’t have a choice. As such, we have no power to protect the value of the music we create.”

Considering this, how does Pandora still claim to benefit creators? Pandora’s CEO referenced the supposed marketing value of his site in his address too listeners, writing, “Pandora has become a real home for artists that have never had this kind of audience before.”

131219-pandora-bmi-lawsuit-rights-1Pandora will continue to claim that publicity garnered by being on its platform is payment enough.  But that publicity only turns to revenue when it manifests itself in album sales, which are drastically in decline as streaming takes over as the music-listening medium of choice. Streaming itself is becoming the dominant revenue stream, which is why Pandora’s payments – not its supposed exposure value – are critically important.

Ironically, Pandora is competing with and overtaking the actual purchasing of music, while claiming it spurs sales.

Ultimately, no amount of publicity is worth giving up any chance at earning a living. And just how much benefit do artists get from plays on Pandora? Shockingly little. In fact, Pandora released a study last November touting the “Pandora Effect” which revealed that “For new music, the positive effects were 2.82 percent for majors and 0.62 percent for independents, although the latter was not statistically significant.” So what is the real Pandora effect? Little to no jump in sales, and a royalty for songwriters so small that even successful ones can barely make a living.

Pandora’s CEO says confidently that it’s “very exciting to think about the impact internet radio can eventually have on the future of these talented and deserving artists.” He goes as far as saying, “If we do it right, together we can really make a difference for them.”

The difference for songwriters will be that instead of achieving a fair, negotiated royalty rate for their songs, they will be dictated to by a massive corporation that fights to keep archaic government regulations in place in order to pay them less and less.

My hope is that instead of trying to convince music lovers that they’re doing something good for songwriters and artists by listening to Pandora, its CEO will actually do something good by starting to pay them fairly.  Perhaps Pandora’s New Year’s Resolution could be to value creators so that songwriting and streaming can thrive this year and the next.  Let’s let 2015 be ‘the year of the working songwriter on Pandora.’

David Israelite is the President and CEO of the National Music Publishers’ Association (NMPA). Founded in 1917, NMPA is the trade association representing American music publishers and their songwriting partners.

Image by Simon Bleasdale, licensed under Creative Commons Attribution 2.0 Generic.

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  1. Does anyone else find it odd this article was rereleased with the same title, but through a different source? Only they leave out the comment thread that could help the general public determine the validity of the article. Guess they decided to try their persuasion on another crowd. Must not have liked the momentum building up. Any who. If you are not familiar with the author, I too had to look him up, pretty clear this guy has a one way agenda. Even better. Look at his company’s mission statement! What a joke. They can’t honestly believe we actually believe that stuff right?! I found the word “members” 6 times. Not trying to attract subliminal messages are ya guys?? You’re merely class A of the minor leagues. Use your time promoting what you do good instead of spreading filth throughout the internet. Check this. Pandora, a separate league from Spotify will rise to the top of their game. Oh wait. They are at the top. Best of luck to Spotify in their endeavors, I do not use Spotify as Ive had Rhapsody for those needs for some time, but all the same, best wishes still. As for BMI & ASCAP & production co’s, might i recommend investing in lubricating jellys?? 🙂
    You want to be paid MORE as a writer as your primary job? Heres an idea, try what the rest of america had to do to survive the past 5 years, get another job.

  2. Assuming theyre not already? Negotiate their cut bw the producers and possibly the artists. If they feel they are that good at what they do,announce it’s time for a promotion or go write for an artist who appreciates your work more I guess. Why is it the artists make their $, the producers theirs, and yet bc the writers dont like their cut, they ask P for more of their money? Doesnt seem right does it? How many writers are out there that do not get paid performing royalties due to the fact they only write and nothing more? As far as Ive ever heard, having even the slightest hand in on a “hit” song can set one right for quite some time. Let’s assume its within the avg salary of the average American. Not including the 1%, is it safe to say $70k? Could writing a top 10 (if those even still exist) song pay close to this without actually performing? (From stories Ive been told, Id say this is a very mild estimate) Assuming this is the compensation, how long does it take to write that song? I guess you try and try thousands of pitches until the one goes through. Could take years or a lifetime right? But does having a hand in on a one hit wonder at the least deserve to allow one to kick their feet up for 10 years at a time? Or allow retirement instantly as if signing a professional sport contract?
    Simply asking. Could someone help to better estimate what writers typically make? How much do bullpen catchers make btw? If its close to what writers make, Im in. Hell give me a seat in the dugout and let me travel w the team and its on the house!
    Most artist Ive ever listened to write their own music. For the artists who do, do they not collect 2 separate %s of royalties? I realize country music does not stand a chance having to support itself without the holy writers that have clearly proven their lyrics depth in this genre. I feel like the majority of heat put out on this issue, comes from this territory.
    Last note. People who choose, as it is a choice, to be writers and only a writer, what do they do for money while waiting for the big hit? Starve? Take side jobs to make ends meat? Does writing a song about a big green tractor and handing it to the next country head in the lineup constitute a Tom Brady paycheck? Please help me to see what paid “reasonably” entails, and how the current sytem is unfair.

  3. Tv/film placements, video game placements, retail store soundtracks and brand sponsorships are how a songwriter can make $$$. Free streaming is a gateway to each of these sources of income.

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