Recording Industry Lobbyists Accuse Pandora Of Deliberately Not Selling Ads To Plead Poverty To Congress
from the right,-and-the-labels-just-need-to-sell-more-albums dept
I'm always amazed at how copyright maximalists from the entertainment industry insist that no one can comment on their own businesses unless they're "in it" while freely commenting on other businesses they clearly know nothing about. Here's the latest example. The musicFIRST coalition, which is basically a lobbying operation set up by a few of the big legacy players in the recording industry (including the RIAA, A2IM and SoundExchange) in order to push for ever higher royalties for music, has been fighting hard against any effort to create royalties for internet companies that would allow those companies to survive. Like the Golden Goose, the labels have decided that if anyone online is making money, it's best to squeeze as much of it out of them as possible until they're dead, rather than allowing them to grow and to provide sustainable revenue back to the industry.But their latest blog post really takes public cluelessness to new and impressive levels. It's a response to the news that Pandora's listener base has been growing. That should be celebrated, but, as Pandora has been pointing out for ages, thanks to the crazy high royalty rates that it has to pay SoundExchange (which are many times the rates of satellite radio and infinitely larger than terrestrial radio, since terrestrial radio has an exemption from performance royalties) it is close to impossible for Pandora to ever be profitable. Even worse (for musicians, the industry and the public) these crazy high rates means a lot less competition, fewer new authorized services and a smaller market overall. Pandora has been seeking more reasonable rates that would actually allow it to provide more services and to grow the overall pie even more by adding more value. However, so far, that's been cost-prohibitive given how much goes out the door to SoundExchange.
So, along comes MusicFIRST with the "solution" to all of Pandora's profitability problems: sell more ads. No, that's not a joke. They seriously seem to think that Pandora's problem is that it has chosen to take on less revenue and that all it has to do is turn the knob up and sell more ads:
As economist Jeff Eisenach testified last year regarding Pandora royalties, "the ratio of Pandora's content costs to its revenues is within Pandora's control: To raise its revenues, it need only choose to sell additional advertising" or find other ways to cash in on its popular and successful product.As someone who relies on advertising for a portion of my income, I wish musicFIRST had just told me all along that the fact that ad rates are so low and that fill rates are so dismal on advertising all across the internet is because I just wasn't trying enough and that I'd purposely been "limiting revenues." Why don't we just flip that one around? Perhaps the reason that the major labels and SoundExchange have been making so little money is that they're not selling enough. All they need to do is sell more and all their problems are solved. No need to go plead poverty to Congress and demand a jacking up of rates, since -- by their own logic -- they just need to sell more, and clearly, that's easy. If they're not selling more, it's because they've decided to limit revenue.
Pandora is choosing to limit revenues for now by keeping advertising low and attracting customers to its free service tier.... It's no reason to plead poverty in the face of massive audience growth and "better than expected" earnings reports.
Stories like this make you wonder if anyone actually takes musicFIRST seriously.
Separately, musicFIRST trots out the lamest trope in the book in the attacks on Pandora: focusing on the value of the company and the equity its founders hold. Only someone who is deliberately misleading or completely clueless on basic financial issues would equate a company's valuation with revenue. The two are wholly different beasts. And yet, these lobbyists pretend that the equity that Pandora execs hold somehow is taken unfairly from artists. That, of course, makes no sense if you actually understand the difference between equity and revenue. Any artist could have had the same equity if they had built Pandora. They didn't, so they don't.
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Filed Under: business models, interactive streaming radio, licensing, lobbyists, performance rights, royalties, selling ads
Companies: musicfirst, pandora, riaa, soundexchange
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Annoy the customer, provide a worse experience. Sounds like something the MAFIAA does regularly. No wonder they think it's the way to go.
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So their "solution" would put Pandora out of business.
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musicFIRST. They said Pandora is keeping ads infrequent to attract users.
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Artist-hating Mike Masnick also conveniently leaves out this nugget:
http://www.digitalmusicnews.com/permalink/2012/121120pandora39
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On the other hand, he also left out this nugget:
http://mediadecoder.blogs.nytimes.com/2013/02/27/pandora-to-limit-free-listening-citing-roy alty-costs/
As a (co-)songwriter, Ellen Shipley would only get part of the royalties going to music publishers... which are only a small part of the royalties that Pandora pays.
The lion's share goes to the copyright holders - which are the RIAA clients (record labels), who are not-so-coincidentally the people behind musicFIRST.
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FTFY
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Just because they've gotten filthy rich by ripping off their artists, and their customers doesn't mean Pandora has to use the same business model to succeed.
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Of course they are. They don't want a any other solution out there but themselves.
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It applies to everyone.
Why would the music industry not stop the content people want to inject an advertisement. Television networks do it all the time. Radio shows do it between music pieces as well, so why not stop the piece when people are listening. That's leaving money on the table, the music industry can't complain of losing money if they are not taking every opportunity to make money.
Disregard the effect this has on the customer base and how much they value what they are paying (or not paying) for. The consumers should never get to determine what anything is worth, they should just take what they are offered and be happy. Ugh, dirty peasant consumers.
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They could call it the British Navy Bay and watch the money roll in. Seems kind of stupid on their part, don't you think?
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You hit the mark quite accurately: the music industry could rake in mounds of dosh by setting up a "pirate website" and selling ads, merchandise, etc, but they choose not to and instead wasting money on lobbying and lawsuits.
Yes, they are actually motley fools..
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This was already discussed here and it has been proven to be false. Most sites make barely enough to stay afloat and those that are very successful would still not cover a middle-class household wages by a decent chunk. And yet they provide better services and experience than the MAFIAA.
I have yet to see a "piracy" site owner with all those yachts, luxury cars and uber mansions. Unless you believe Google is dedicated to piracy which would be just proof of your ignorance.
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By providing a service that millions of people around the world considered worth paying money for. You should try it some time.
And even if you went along with your provably false statement that MU was a genuine 100% piracy site, your one solitary example proves very little. The claim is that lots of piracy sites are getting rich, but you have no other examples.
"You pirate douchebags are hilarious."
And your attitude to the very people whose behaviour you want to change is hilariously stupid. Why would I listen to anybody who calls me names?
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By the way...
Show of hands: who here is using AdBlock/NoScript/hosts file/firewall/something else to block ads?
* Raises both hands and one foot *
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Raises hand.
Actually, that last is going down because I don't have to deal with web screens that are more garbage than anything else. I've seen what the web looks like on non-blocked computers, how can people stand it, and how can the data overages not destroy them from the ads being 90+% of the page data?
Ad blocking is just simple security practice. Aside from ads being a form of fraud in and of themselves, ad networks are infested with malware to an insane degree. If I service a computer, an ad blocker is mandatory, you are getting at least one, or I will not waste my time trying to fix your system.
Since Google has placed their revenue over the security of their users, root your Android device, find F-Droid, get Ad-Away, update every now and then.
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I really *don't* want to do that, and I don't use ad blocks on my tablet or my home PC.
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Once again Mike you overlook the obvious :P
Or
Both
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I'm fairly sure "copyright maximalists" DO have all sources tapped.
"And yet, these lobbyists pretend that the equity that Pandora execs hold somehow is taken unfairly from artists." -- WHERE ELSE DOES IT COME FROM? Pandora produces nothing; like Megaupload or any other file host, it's simply a middleman grifting off the value artists make.
"Any artist could have had the same equity if they had built Pandora." -- BUT Pandora could NOT have the same equity WITHOUT artists! See the difference there? You CLAIM you're for artists, but ALWAYS in practice you're for the grifters who get unearned income from the art.
This is another case where you package up disparate notions and try to put them all over at once without anyone noticing. 'Sides that, if you deny that financial tricks can minimize revenue now for future gains, then it's you who are clueless about human nature.
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
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OOTB is living under the bizarre delusion that you have to "produce" a "thing" in order to create value.
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For the record, I'm not fond of retail or other grifters. Some is necessary for the distribution chain, but it's ALL grifting off what labor makes. Look up Labor Theory of Value.
Obviously you've never done real work, or you'd KNOW in your bones and sinew the root source where ALL value comes from: human labor. -- No, brains ain't enough, takes people actually producing goods. You can think yourself rich as you like, but will starve if no laborer feeds you.
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The labourer will starve too without the tools and the technology to produce (or transform) goods, and the mechanisms to distribute them.
You make the mistake of thinking that only the production links of the chain are essential, making all others redundant.
The reality is that no business will survive for long without a strong distribution channel. Why do you think that the wheel and axle was such a vital invention for humanity?
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So only farmers don't grift???
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I do not like middlemen either. Record companies are a great example of pure middlemen, providing nothing but contacts to artists, rubbing them of their intellectual rights and arbitraging their costs.
Labor Theory is a bit old today where clothes stores run prices up by 100s of percents and several other parts of the market lack the perfect information needed. Also, laborers needed is a smaller and smaller percentage of the society as machines take over a larger part of society. Last I checked 80+ % of people in jobs are middlemen in some shape or form and that number will likely increase...
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Re: Re: Re: Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
You do realize that this goes against the very idea of "intellectual property," right? It means that authors, songwriters, designers, etc. are not "actually producing goods," since they work with their brains alone.
In fact, generally people who espouse the "Labor Theory of Value" are not very artist-friendly at all, as they view payments for art as an example of commodity fetishism.
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Without the least hedge: The RIAA produces a lot of fat cats who get rich grifting with unearned income off artists. -- Now, IF you would ever take time to read my posts, you'd know I've NO trouble admitting that. I'm against unearned income wherever and however it occurs.
You need to see that your split is mostly with Mike, who yet again HERE is exactly defending Pandora's unearned income. Pandora is trying to be EXACTLY like the RIAA, that's really about all the difference between "teh internets" grifters whom Mike favors, and the existing ones. I'm against ALL grifters; Mike is FOR some.
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I don't see any point to going another circle on this. You ADMIT my points, just don't want to be seen agreeing. Fine.
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You do realize what a service is, right? Pandora provides a service to artist and customers which has value for both. And yes, the labels, even the RIAA, provide services too. The problem is, they demand too much money for the value they create, and are trying to wedge themselves in between the artist and Pandora to extract money where they're not creating any value.
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Like the money you make from your corporate masters for posting here, boy?
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
Be a real surprise if not."
The joke of the day.
Tell me, have you been paying attention to the past...oh...one hundred years of the copyright industry's existence?
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
We all know that is the Recording Industry's job!
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
That's true of many middlemen, I suppose. So what?
A used bookstore doesn't send any money to authors, nor used record stores to songwriters or musicians.
The law doesn't give authors a right to all revenues attributable to their work. Indeed, it should only mete out to them the minimum rights necessary to get them to create and publish works that they otherwise wouldn't. Giving them more than that is needless waste.
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
should read...
"BUT DISNEY could NOT have the same equity WITHOUT artists! See the difference there? You CLAIM you're for artists, but ALWAYS in practice you're for the grifters who get unearned income from the art."
Thanks for agreeing with us, boy.
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
"Pandora produces nothing; like Megaupload or any other file host, it's simply a middleman grifting off the value artists make. " So the local top 10 station is a middleman grifter right? as is XM radio? Without specialized software, I cant download from pandora. Moreover, i can't tell it to play me a specific song. It also takes a lot of work to get pandora to give me a great radio station. But thats what pandora is, personalized radio. Not a file locker.
"This is another case where you package up disparate notions and try to put them all over at once without anyone noticing"
Seems your the one picking up 'disparate notions' there, with equating file lockers to Radio, and trying to obscure what equity is and how one gets it by conflating the value of 'music' with investment in 'the service', the latter being the only source of equity on Pandora's books.
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Re: I'm fairly sure "copyright maximalists" DO have all sources tapped.
What's the matter, cat got your tongue?
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Kind of like you. Except unlike Pandora, nobody wants to listen to you.
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The argument contradicts itself
"Pandora is choosing to ... keeping advertising low and attracting customers to its free service tier."
This statement implies that fewer advertisements attract customers. The inverse of this argument is that more advertising drives customers away.
So their solution is "sell more advertising, " which, based on their own argument, will drive customers away.
So their own argument says that Pandora isn't going to make more money by advertising more. They'll simply lose customers, therefore not making any more money for royalty licensing.
FWIW: I think ALL forms of radio should pay exactly the same amount: online, satellite, and terrestrial. I discover (and buy) a lot more music these days online than I do on FM, yet FM is the one that doesn't have to pay jack for royalties.
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Even with the loose interpretation of 'value', that business model sounds familiar somehow... are you saying the recording industry has that street corner staked out and no other bums are allowed?
Again, even though I can't construe your take on Mike's article with what I read in the same article, that sounds somehow familiar.
I've seen the facts on the MPAA associated companies setting up shell companies and charging them absurd amounts for nominal cost services, then claiming "losses" so they don't pay have to pay royalties.... but I haven't seen a writeup of how the Recording industry does this.... Article or reference or 'where have you been dipshit?' request!
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"Looooooooooots of ads!"
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LOL
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To have or not to have
Some might suggest I pay Pandora $50 ($60?) per year to hear music with no commercial interruptions. The problem I have with paying for listening to music is that it turns me from a passive listener (which I happily am) to an active stakeholder (am I getting what I want for my money? Are there better ways to spend that money?...) I don't know about you but I have enough on my plate not to want to think about such questions and more financial commitments than I care to juggle with.
Something tells me I'm not alone with this dilemma...
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That's the sound of the leech in the middle.
Don't feed the leeches.
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Are you mental?
By the way, part of the reason for the minimized paycheck for artists from these royalties are the cut for the REAL middlemen.
And look up the economics concept of "ancillary value." It's revenue that didn't exist before because a new way of making money exists.
This perspective is nothing more than luddite technophobia from organizations with a tradition of smallminded, shortsighted technophobia, the guys who resisted the player piano all the way down to the VCR.
If you knew anything about technology, by the way, you'd know Pandora is - mostly - free. You don't have to PAY for it if you want to use it.
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Oh look I found kind of a call back...
The content is worth more more more.
Because someone else put the time and effort into building a platform that met what consumers wanted, but they shouldn't get anything for doing what we were unwilling to do ourselves.
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There was recently an article where an online magazine was bitching that roughly 40% of it's viewers were blocking ads. That can't be because those potential customers enjoy ads. Ads are like a pest industry no one wants but those that make money off of it.
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musicFirst isn't a business
Plan B, of course, has been spectacularly successful. Essentially they compensate (via lobbying jobs, campaign contributions, and movie cameos) elected officials to pass laws that guarantee these dieing businesses a certain level of revenue. They enlist the FBI & other law enforcement personnel to act as their private police force against the interests of the citizens they are supposed to serve & protect. And finally, public prosecutors serve as their personnel law firm, pursuing average citizens and imprisoning them for what are, at worst, minor torts.
Given the massive sense of entitlement that these failed industries have come to expect, it's no wonder that they have no idea how real businesses work. As the RIAA continues to fail financially, there only recourse is to enlist the state to increase their legally mandated compensation. So, of course they expect Pandora and other businesses to do the same. Not making enough money? Just tell people to give you more! Maybe Pandora should follow the RIAA playbook and begin bribing (because that's what it is) government officials to force advertisers to spend a minimum amount advertising on Pandora each year.
Of course! That's the real solution. Let's make Apple & GM & Coca-Cola support the lazy, unethical RIAA executives by forcing them to each spend $100 Million/ Year on Pandora so that Pandora can continue to pay government-mandated monopoly rents to 4 failing businesses. Or maybe it's 3. I dunno, but pretty sure it will be zero eventually, then maybe we can move past all this. Once the rent-seekers are removed from the equation, I suspect revenue will increase at a greater pace and artist income will likely double or triple as the inefficiencies of the dieing record labels are eliminated and the middlemen found themselves out of a job.
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Control
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There's a reason for that
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Re: There's a reason for that
They believe that because that's how the media companies that they represent operate.
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Important to keep the discussion - not preaching to the choir
"This comment has been flagged by the community. Click to show it."
Is this what TechDirt has become? Is the community so sensitive that it must hide the alternate viewpoints? I have yet to a viewpoint that was in any way offensive. At least not to the point that it should have been hidden.
Man Up TD. Your arguments stand on their own. You don't need to engage in protectionism....that just makes you like those you claim to be against....
-CF
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Re: Important to keep the discussion - not preaching to the choir
I agree people are a bit trigger happy, but the report button is for comments that are "abusive, spam, trollish, or otherwise inappropriate". Almost 100% of reported comments are in the "trollish" category (meaning they're reported for that reason). Many, such as almost everything ootb writes, and I think absolutely everything darryl writes, are trollish.
To be honest, most of the opposing comments around here, by volume, are ad hominem, strawman, off topic, or otherwise not a useful contribution to the discussion. When someone posts a thoughtful disagreement I think it usually stays up. But I'm sure there are some that are incorrectly caught up in the net.
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