Pandora: We're Helping Artists Make Millions & We'd Like To Keep Doing That
from the interesting-to-see dept
For all the talk of new music platforms not paying artists enough, we keep hearing counter stories. The latest is that Pandora has revealed that two artists -- Drake and Lil' Wayne -- will make somewhere close to $3 million in royalty payments from Pandora this year. Lots of other artists make many thousands of dollars as well:Have you heard of Donnie McClurkin, French Montana or Grupo Bryndis? If you haven't you're not alone. They are artists whose sales ranks on Amazon are 4,752, 17,000 and 183,187, respectively. These are all working artists who live well outside the mainstream - no steady rotation on broadcast radio, no high profile opening slots on major tours, no front page placement in online retail. What they also have in common is a steady income from Pandora. In the next twelve months Pandora is on track to pay performance fees of $100,228, $138,567 and $114,192, respectively, for the music we play to their large and fast-growing audiences on Pandora.Of course, while all of this is happening, Pandora is not yet profitable, and may never be profitable -- as it is required, under current webcasting rates, to pay about 50% of its revenue out as royalties (while terrestrial radio and satellite radio get to pay much, much less). As Tim Westergren has pointed out, because of the crazy rates, plenty of other webcasting operations have just left the business entirely -- meaning that there just aren't that many players in this space, because it just isn't profitable for the companies, even as they're developing important new revenue streams for artists.And that's just the tip of the iceberg. For over two thousand artists Pandora will pay over $10,000 dollars each over the next 12 months (including one of my favorites, the late jazz pianist Oscar Peterson), and for more than 800 we'll pay over $50,000, more than the income of the average American household. For top earners like Coldplay, Adele, Wiz Khalifa, Jason Aldean and others Pandora is already paying over $1 million each. Drake and Lill Wayne are fast approaching a $3 million annual rate each.
I'll have more on this later, but it often seems that legacy players really have no concept of "the golden goose." They assume that any tech company, who is moderately successful in getting users, simply should be bled dry, paying out just about everything to artists, with nothing left for the companies themselves. They think that the music is the entire value, and the service provided is not very important. And yet, without that service, none of that money would come in at all. At some point, the legacy guys are going to have to realize that they're better off having a healthy ecosystem of services, rather than squeezing the absolute highest rates out of these companies, in a way where they can't survive.
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Filed Under: artists, business models, drake, internet radio, lil' wayne, money, royalty rates, streaming
Companies: pandora
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Netflix, Pandora, Spotify and many others are there to simply crush their favorite argument that you can't compete with free and yet they are simply ignoring it and worse, trying to kill them.
Futile discussion, focus on preventing them from changing the laws in their favor and wait till they die naturally by multiple shots in the feet.
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Read what Masnick wrote. He's bitching because artists are getting paid better than the tech company.
Freudian slip.
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Also, the term is used to refer to the anti-piracy collectives in general and how their behavior are similar to the Mafias with less illegal moves and much more legal abuse of the system.
The fact that it is a meme alright is new to me though, thanks for informing. The fact that you think it's infantile is irrelevant ;)
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Unlike, say,
Google, Demonoid, Utorrent, WhatCD, blah blah blah.
You know, internet leeches that exploit the work of others.
What a noble cause you're championing there, pal...
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You mean like "piracy"?
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Didn't really think that one all the way through, did you Sparky?
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You can vote for any of their cronies - democrat, republican or independent. Where's the party that will retain the rights for ordinary people and tell these morons to actually offer what people want to pay for instead of enforcing a business model that stopped being viable over a decade ago?
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Sure I did, but I also dismissed that as irrelevant. My point was that both sides of the argument invent or redefine terms to describe the other side. Do you really think copyright infringement compares in any way to "an act of robbery or criminal violence at sea"?
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http://wampus.com/2012/11/29/the-artist-compensation-storm/
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I keep wondering why artists are not complaining much more about how things like this keep their audience from even hearing about them in the first place.
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Into the wild future!
This is perfect! Now, when radio broadcasting fades away, they groundwork for raping webcasters will already be a precedent and the US Courts & DOJ will continue to violently enforce the MAFIAA "rights" to "earn" money for doing not a damn thing.
(/shill /troll /not.sure.what.to.tag.this.with)
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That's because they believe they ARE the golden goose. So they decide "There can be only one" and go Golden Goose Highlander on everyone else.
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2- Kill online service;
3- Profit?
See Mike, the RIAA didn't need a fancy-pants website to figure what step 2 is. Just kill everything that looks different, and then complain you ass off when people resort to piracy due to lack of legitimate options.
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It's like having a radio station you can tune to your own favorite styles. Besides my favorites, I often hear new music, and I usually enjoy it because it matches styles I enjoy. it's certainly a good idea. I wish they "tuned" on lyrical preferences as well, but maybe someday if they're not out of business...
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P.S. Did I suddenly go back to the record shops when Pandora Canada disappeared? Nope. Still searching for an equivalent internet alternative.
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"Pandora is not yet profitable, and may never be profitable..."
But I don't just skip past the HUGE QUESTION! -- Who exactly is funding this perpetually LOSING MODEL?
There are corollaries: if Pandora can withstand the current royalty rates (however it does), what's wrong with them? Obvioulsy it's found "whatever the market will bear". (Costs DON'T matter if the profits are high enough -- not even the "profit margin", but the amounts that go to everyone involved.)
Second corollary is that manifestly more is going on in this losing propostion than Mike bothers with. I'd suspect either tax advantages or hidden kickbacks. But Mention-Then-Forget Mike* the Ivy League economist doesn't think that's interesting...
[* In his "can't compete" piece still featured on a side link, Mike mentions "sunk (or fixed) costs" of $100 million for a movie, then utterly forgets it! Yeah, it's easy when your "business" can lose money or ignore costs. But nothing on this site is real world examples, it's all JUST "models".]
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Re: "Pandora is not yet profitable, and may never be profitable..."
If you can survive with very basic stuff (namely food, water, basic clothing and a home) what's wrong with the Government charges 90% of your monthly wage as tax? See the problem with your comment? The current rates do not allow for reasonable profits for the ones providing such services.
As for your sunk cost whining it's fairly simple: do you believe Pandora would be able to sustain itself if people didn't find their service useful? Do you really think it matters that $100 million were spent if the movie is utter crap? Do you ignore the fact that the most pirated movies are also mind blowing revenue successes? Can you please explain what the fuck this has to do with charging slightly lower rates so businesses like Pandora and Netflix can thrive and take your content to the users in a manner they'll pay regardless of having the opportunity of getting for free?
I don't think you can give a reasonable reply for any of those besides your meaningless, baseless and annoying whining.
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Re: Re: "Pandora is not yet profitable, and may never be profitable..."
I'm confused. Are you referring to the artists' services or Pandora's services? Because if Pandora is allowed to pay what US radio pays (or doesn't pay, really), then the artists are the ones who will be denied a reasonable profit for their services.
It's a simple solution: if Pandora can't pay artists, Pandora shouldn't play artists. It's what every single business has to deal with. If McDonald's can't pay employees, then Mickey D's doesn't get employees. They don't get to have the government indenture employees to them. There are plenty of small artists who will go in with Pandora at lower rates, but we all know that it's the BIG artists that get the eyeballs/listens, so Pandora would be foolish to forgo those catalogs. But since they can't afford it (or rather, their execs don't get enough profit to snort bad blow off half-dressed nitwits), they want the government to step in. It's sick stuff.
I see no reason why the government or anybody else should be forcing artists to lower their rates.
And I used to like Pandora; but trying to perpetuate this rip off that was started by US radio is unconscionable. Let's take a look at some of the company we keep among those countries that also don't have radio performance rights: North Korea, Iran, China, Rwanda.
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I have Pandora One - but otherwise.. I had HEARD MUSIC FOR FREE and then bought it - wow!!
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Paying out 50% of revenues should not equal no profits
However, I really have to wonder why Pandora is unable to earn a profit.
Consider a traditional retailer. They purchase goods, pay rents, pay salaries, etc., etc. They then sell goods for a markup that is almost never 100%. In some industries, the markups are in single digit percentages.
If you think about the requirement of paying 50% of revenues instead as simply that Pandora is selling its product (i.e., the license to listen to a streamed song) for a 100% markup, it's a lot harder to feel sorry for them.
Perhaps, instead of complaining that they are not profitable because of the "revenue sharing" (i.e., legal extortion) scheme, Pandora should be looking at why it is not profitable.
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Compare to a radio station and the costs are similar, utilities, equipment, and personnel which make up a large portion of the expenses (lets say 50%)... now if the radio stations have to pay a 20% licensing fee to the labels, they still have a 30% profit margin... if Pandora has to pay a 50% licensing fee (mainly to the artists), they have 0% profit margin....
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Re: Paying out 50% of revenues should not equal no profits
That's the killer here. Mike goes on and on about bandwidth being so cheap, and all that, and yet when it comes time to explain why a company doesn't make money, suddenly bandwidth is a big expense.
The business model of Pandora should be a huge money spinner. Any business where the basic costs of operations are fixed as a percentage of advertising means they should be profitable if they scale up. Pandora's real problem appears to be not enough clients, not enough advertising to cover it's other costs with a margin after materials of 50%.
I am guessing that Pandora has discovered that, in a world full of pirates getting content for nothing, not enough consumers are willing to listen to ads to get their service.
The other thing is that Pandora isn't available outside of the US, but with a 50% payout rate, they should have no problem signing new licensing agreements for the rest of the world. My guess is the real issue of profitability of Pandora has absolutely nothing to do with the licensing agreements, and more to do with the costs of operating the business.
Licensing is a handy scapegoat that people like Mike can latch onto, hiding the real issues of the business.
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I do love the fact that you attack Mike for making an educated, reasonable opinion with the information at hand, then admit that the "truth" you're pushing is also pulled from your own nether regions.
"Wahhh!!! Pirates!!!" isn't working any more, find a new song.
"Pandora's real problem appears to be not enough clients,"
Where? They're not allowed to expand their market, as you later admit.
"The other thing is that Pandora isn't available outside of the US, but with a 50% payout rate, they should have no problem signing new licensing agreements for the rest of the world"
From the very same people who insisted on them not being available outside the US in the first place, no less. I wonder where the problem could lie?
"Licensing is a handy scapegoat"
Just as piracy is for you. One is a real problem, the other can be bypassed by... well, licencing content to legal providers at a reasonable rate and not forcing them to block 5/6th of the planet from using their service.
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Ok, I mean, maybe if you are a big fan of a group/artist you might, but then you wouldn't be a 'big fan' had you not heard the music, for free, somewhere first.
Sure, maybe the CD's I buy are often used, but I buy new also. Pandora is this old man's gateway to new music. I've bought more music in the last 90 days than the last 7 years; thanks to PandoraOne.
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Pandora partners
An example:
-UMG artist collects 50% of Pandora's ad revenue per play.
-Independent "Pandora Premium Partner" accepts 0-10% of the revenue.
Therefore, when Pandora is trying to decide what track to play next, the PPP is given more consideration than it normally would be. That way, the "popular" label acts still get played and paid, but smaller guys get a lot more exposure in exchange for their "cut".
Sounds like nothing but a win-win to me.
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I like teachers....
Romney said it first.... Idiot
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More FUD from Masnick
Terrestrial radio plays about 13 minutes per hour.
If you play less ads, your revenue is less. If you play less ads, you play more music so your costs are going to be higher. This explains why Pandora pays such a high percentage of its revenue in royalties. Maybe Pandora should play more ads rather than whine about "unfairness".
I doubt even lower rates will save Pandora.It will just lower barriers to entry for internet radio and the big boys (Apple,Google,Microsoft) will jump in.
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Yes, because multiplying the number of ads you play will never backfired, and people who listen to it certainly don't use the service because there's too many ads on commercial radio!
Oh, and you seem to be missing the fundamental argument. This isn't just about Pandora's issues, but the fact that high royalty rates have pushed most of their competition out of the market. If Pandora are making them millions, why does it not make sense to adjust the royalty rates to both allow them to be profitable and encourage new players in the market?
"I doubt even lower rates will save Pandora.It will just lower barriers to entry for internet radio and the big boys (Apple,Google,Microsoft) will jump in."
...and that would be a bad thing... why?
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And why would they want to do this? Because they're trying to preserve their gatekeeper role. Their objective is to keep music discovery in check so that a critical mass of the general public is mostly exposed to the blockbuster hits they're trying to promote and turn in to multi-platinum best-sellers, which they were able to do in concert with broadcasters before you had things like filesharing, Internet radio, and online retailers that aren't limited to keeping only a few thousand titles in stock, things that make it much to easy for consumers to discover and purchase music they enjoy from backlists, obscure genres, and lesser-known artists. When too many consumers are spreading out their music spending among these CDs instead of the ones the record companies want to be in their faces, they see that as a bad thing.
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