Pandora Goes For The Artist Jugular, How To Fight Back [JEFF PRICE]
By Jeff Price (@TuneCoreJeff), Co-Founder of Audiam and Founder and Former CEO of TuneCore.
For those artists not aware, Pandora has taken the gloves off completely and is out to beat the crap out of you to make more money.
Pandora is an Internet streaming radio service that makes money just like AM/FM radio, through advertising. It's also a publicly traded company. All of its investors and shareholders want to make a lot more then they already have.
They have a few ways they can do this. One is to be more innovative and valuable to advertisers allowing them to increase ad rates – you know, like YouTube did. The other is to screw the artists and find ways to pay them less and less and less and less and less lowering Pandora's expenses increasing the companies revenue.
Between these two options, Pandora has chosen to try to pay less for music. To that end, it put together a multi-million dollar lobbyist budget. These lobbyists sole job is to convince the US government to pass a law giving Pandora a "compulsory" license to use artist's music at a "statutory" rate that is as low as possible.
In other words: artists can't say no to Pandora and can't negotiate how much they get paid when Pandora uses their music. If Pandora has its way, the meager table scraps this multi-billion dollar company is paying artists will go down even more.
Fortunately, this plan has not been working too well. Realizing this, Panodra took advantage of an unintended legal loophole that lets them pay even less money than they are now if they own an AM/FM radio station. They bought one in South Dakota to piggyback off the royalty rates this tiny station in the one of the least populated states in the country has to pay.
Let's be clear, this is a no holds barred fight between artists and Pandora. Pandora is going for the jugular. They will do anything to drive down the cost of using the music, including strangling the artists income stream to the point of killing them. In Pandora's world, there is no artist choice; you all MUST let them use your music at the cheapest possible rate possible (and yes, Pandora has tried to have the music be free to use).
Pandora's usual response to driving down rates is whining that other entities get to pay less then they do.
Frankly, I don't care. This conversation is about Pandora. If Pandora wants to use the music, pay for it. If you don't want to pay for it, make your own music. Oh wait, you can't make your own "Hotel California"? Then I guess the music artists make has value. Pay for it.
Artists need to step up and fight back. They were not put on the planet so Pandora can have a 20 billion dollar market cap at their expense.
Here's what artists can do:
Pandora needs two copyrights to play a song on Pandora.
1) The Recording:
(For example, Arista Records hired Whitney Houston to sing the song "I Will Always Love You". When they are done, the recording of that song is owned by Arista Records.)
2) The "Composition": (aka the lyrics and melody).
(For example, Dolly Parton wrote the song "I Will Always Love You" that Whitney Houston sang.)
Each entity – Arista Records and Dolly – gets paid a separate royalty each time Pandora plays the Arista Records' recording of Dolly's song.
Right now there is a law that allows Pandora to use the recording of the song and pay a government set royalty rate to Arista Records regardless of if Arista Records wants them to.
However, there is no law that forces Dolly Parton to let Pandora use her Composition AND no government set royalty rate if they do.
If Pandora does not have the license to the Composition, they can't play the song – be it Arista Records' recoding of it or anyone elses.
Typically, Pandora gets this Dolly Parton right – called the right of Public Performance – from ASCAP, BMI and other entities like them around the world.
Here's where the artist can fight back.
If an artist wrote the lyrics and melody of a song (the Composition) and the song they wrote is being played on Pandora, the artist can contact ASCAP or BMI and withdraw the right of Public Performance for Pandora from ASCAP/BMI.
With the right withdrawn, the artist/publishers can then contact Pandora and tell them it no longer has the right to play that song unless they pay more money.
This is exactly what Marty Bandier at SonyATV Music publishing has done.
And it's exactly what BMI President and CEO Del Bryant states you can do in his February, 2013 letter:
"Some BMI publishers have stated in the press that the main driver in their desire to withdraw their works for specific digital uses is to set their own pricing. Publishers have always had the right to directly license. In the case of withdrawal, they believe they may obtain higher royalty rates from this market if they negotiate their own agreements outside of BMI's regulatory framework. By withdrawing works from BMI, publishers become the only entities that can license those works and therefore can deny permission to perform their works if they do not come to agreement on rates and terms."
Once you withdraw your rights, and you have notified Pandora, and they still play your song, they are not only doing so without a license, but are also willfully infringing on the artist's copyright. This means the artist can sue Pandora for copyright infringement for higher damages.
In the meantime, tell Pandora you are not going to let them play your song until the money they pay for artists, songwriters, publishers, labels and composer goes up.
Imagine if the entities that control the rights to the songs by Metallica, Lady Gaga, Arcade Fire, Taylor Swift and the million other members of ASCAP and BMI stood together.
Pandora's strategy of paying artist less would be stopped. It would have to innovate or die. It would also have to pay a fair royalty for something it did not create – the music.
It's important to draw a line in the sand now and take on these entities. Artists do have the power to do so. They just need access to the information and knowledge to fight for their rights.
With this information and unity, the artists can put Pandora back in its box.
Hey Jeff – How come this article doesn’t suggest doing the same for iHeartRadio, Sirius Satellite and other digital broadcasters who already enjoy much lower rates than Pandora? Every terrestrial broadcaster streaming online is already taking advantage of the legal loophole you spoke about. How come this article isn’t focusing on the fact that all of these companies already receive this benefit? Why are you singling Pandora out?
Until 100% of the acts signed to major labels do this, I’m gonna take my scraps, as I definitely get more feedback from fans (old and new!) mentioning they hear my music on Pandora.
When terrestrial radio was the only game in town, I was shut out of using that type of medium to get my music heard. With Pandora, sure, I’ll get 2 cents instead of 5 cents. Big deal. People can hear my music there and the service has, to a certain extent, leveled the playing field.
Do I agree with what they’re doing in regards to the lobbying, etc.? Absolutely not.
But I’m not gonna be the kamikaze pilot sacrificing my ‘airtime’ so that Lady Gaga can get paid more.
(Side note: Be an independent artist and ATTEMPT to get hold of an actual human being at ASCAP or BMI. Those companies are just as corrupt.)
“Members of Congress, and in particular Republicans, need to understand that a belief in property rights and market processes can’t be selective. They should end compulsory licensing now.”
What a load of ignorant self-serving crap STEEPED IN RIAA lies!!!. Tunecore and audiem hypocrite.
Pandora’s FM radio purchase, ensures they pay the COMPOSERS, SONGWRITERS AND PUBLISHERS the EXACT same amount as every other radio station already does. The performers earn the higher congressional negotiated rates that are also not in parity with Satellite or terrestrial.
This screed is intentionally misleading, conflating the interest of the artists with those of middleman like the author Jeff Price, et al. And he’s doing it all just for the sake of the artists….. nothing mercenary here at all.
As an independent artist, who was forced to enroll with ASCAP and BMI, I despise the bullshit and false info the status quo middlemen are proffering.
If Pandora pays the songwriters the same rate as the radio stations and satellite do, which is less, and internet performance royalties are still paid at a higher rate than radio or satellite, which is more.
Does that mean Jeff Price and his organizations that “make money off the backs of the artists” get paid less?
I think the main issue is that it is, in fact, unfair that terrestrial radio does not have to pay performance royalties. That be said, the solution is NOT for Pandora to lower their performance payouts, but for radio to start paying theirs! I really don’t undertand why this issue isn’t cut and dry and simply resolved. The only conclusion I’ve come to is that the lobbyists for big radio aren’t allowing that to happen.
Additionally, the only argument I can find in defense of terrestrial radio not paying performance rights is that it provides free promotion for the recording artist. With that logic, Pandora can make the exact same argument, which I believe is why they think they have the right to pay less, rather than being in favor of radio paying more (which I think is wrong).
Here’s a really simple unbiased article talking about the difference in the payouts for anyone who doesn’t understand it: http://digitalcowboys.com/2013/06/06/4345/
The bigger issue with Pandora, though, is that I think that they just don’t have a very functional business model based on ad supported revenue, especially — as Jeff points out — as a publicly traded company. And it’s driving them to some pretty bizarre, off the cuff actions, in my opinion, like buying that terrestrial radio station to try to lower their rates.
On top of this, their main executives consistently cashing in on millions of dollars in stock options doesn’t exactly exude confidence in the future outlook for the company.
It also doesn’t help when people like the president of ASCAP, Paul Williams, are making blanket statements like “Internet and traditional AM/FM radio services are very different businesses with different formats, using music in very different ways.” Like what?…care to elaborate even just a little dude?
If you really represented the artists interests, you would be arguing for higher royalty rates across the board for internet, terrestrial and sat., not just for internet.
Could it be that the very record labels also own the lions share of terrestrial stations?
Nah, that’s just coincidence.
Would be great if you could link anything backing these assertions up. Instead of anonymously calling someone a liar.
I have a question: Is the big Pandora cut in pay hitting Songwriter/Publisher/Performing Artist/Rights Owner, or only hitting Songwriter/Publisher?
You cannot skip a song? You cannot choose a starting artist? Thats very different in my eyes…
Those certainly are differences, but still not adequate justification for terrestrial not to pay performance royalties.
Well said..! I’m glad you voiced your opinion. I’m no artist but I’m a fan of great music. I want the artist to win always. Reading what you thought helps me understand just what artist I care about have to deal with.
Lordy may…so much mis-directed venom and misinformation in your piece Jeff.
Wake up, smell the coffee, and do some solid homework on this issue and the markets past, present, and future.
It’s mind-blowing that someone like yourself who should be genuinely plugged into “the new business” of digital music distribution & royalties is too lazy to dig deep enough into the truth of the matter.
Your attack on Pandora is extremely misguided and short sighted mate. In a nutshell, the black hats on horseback are terrestrial and satellite radio chief!
Why are you seemingly so content griping about a relative trickle when the the got damn dam is breaking all around you?
Terra radio is riding the royalty train virtually free of charge & Sat radio gets an enormous discount in the dining car. WTF?
Instead of you telling artists to cut off one of their hands already in the bush, tell them to rise up and direct their efforts in a much more forward thinking and profitable direction.
Advise them to tell the powers at be to level the playing field so the royalties are divvied up equally across the board. Then, this conversation goes away and the artists will get paid beyond a wet dreams.
I fid it amazing that Jeff Price, founder of a company that is based around ripping off artists, is criticizing Pandora. This is a guy who charges ridiculous annual rates to indy artists with ongoing annual fees in perpetuity. And if you don’t pay your annual fee 5 or 10 years down the line, you our out of there. Contrast this with an ethical company like CD Baby. Tunecore is a NYC hustle. His new operation is trying to enter a space that Rumblefish has been in for 15+ years- and CD Baby artists automatically get sync royalties monitored and collected by Rumblefish. But I guess the same suckers to went for Tunecore will go for this new scam.
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