Pandora Founder Defends Royalties Stance
Pandora founder Tim Westergren is defending the Internet Radio service’s stance on royalties, calling the recent commentary in the news a “deliberate and orchestrated campaign funded by the Recording Industry Association of America.”
It’s the latest move in an increasingly heated PR war between Pandora and the RIAA over music royalties, which intensified after Pandora went to Capitol Hill with legislation that would lower future music royalties.
In a blog post published on Pandora’s website, Westergren denies that the company is seeking to reduce artist royalties by 85%, calling it “a lie manufactured by the RIAA and promoted by their hired guns to mislead and agitate the artist community.” He added, “we have never, nor would we ever advocate such a thing.”
The debate continued over the weekend when Pink Floyd published an editorial in USA Today that criticized Pandora for not paying artists fairly. “We hope that many online and mobile music services can give fans and artists the music they want, when they want it, at price points that work,” said Pink Floyd members Roger Waters, David Gilmour and Nick Mason in the editorial. “But those same services should fairly pay the artists and creators who make the music at the core of their businesses.”
The Verge is reporting that Pandora has held preliminary discussions with groups representing music artists as well as indie and major labels about ending the increasingly aggressive feud over music royalties and formal negotiations will start soon.
Pandora is under fire after a number of artists claim that they have been ripped off by the Internet music site. One particular post by David Lowery gained a lot of attention after he claimed Pandora paid him only $16.89 for more than one million plays of his song.
Lowery claims that Pandora wants “Congress to change the way royalties are calculated so that they can pay much much less to songwriters and performers.”
Westergren said that Pandora is not doing that, it is instead “advocating for solutions that would grow total payments to artists.”
Currently, an arguably out-dated method by Congress for setting the amount that web radio stations pay to play music is what determines royalties. In 2012, Pandora paid 0.11 cents per stream. Next year, the cost goes up to 0.13 cents, and 0.14 cents the following year.
As a result, Pandora has struggled to make money, posting a net loss of $28 million in the latest quarter. The company is trying to boost ad revenue and change the way royalty rates are set to trim its music costs, which accounted for 61 percent of the company’s $125.1 million revenue during the quarter ended January 31. Satellite radio stations, by comparison, pay an average 7.5 percent of their revenue, and cable only 15 percent, according to Pandora’s previous Chief Executive Officer, Joe Kennedy, during a testimony last year before a House committee in support of the Internet Radio Fairness Act.
As more companies including Twitter, Google, and Apple enter the streaming radio market, the debate over artists royalties is likely to continue. Hopefully the reports that the two parties are coming together to hammer out a deal can help both artists and consumers.