It’s getting just a little personal out in the blogosphere over Pandora founder Tim Westergren’s advocacy of the Internet Radio Fairness Act, which would lower performance royalties for pure play streamers by putting them on a par with satellite and cable audio services.
“Tim Westergren is not running a music service, but a religion,” charges Bob Lefsetz on the Lefsetz music analysis blog. “He expects his flock to follow him blindly, leaving their minds behind, all with the goal of lining his pockets.”
“He owns stock worth double digit millions, yet he’s complaining the company’s getting screwed. Who does this resonate with? Certainly not artists or listeners.
And now in this latest blog post he raves about how much obscure artists are making on his service so he can rationalize paying them less. Huh?”
The Westergren blog entry in question was posted on Tuesday, extolling the fees that Pandora pays to various performers for their presence on the service.
“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.”
In addition, Pandora will pay over two thousand artists more than $10k over 12 months starting around now, Westergren says, including Oscar Peterson. More examples he cites: “Rascal Flatts ($670,351), Iron & Wine ($173,152), Bon Iver ($135,223), George Winston ($85,239), Zac Brown Band ($547,064), The Four Tops ($65,173), Ellie Goulding ($609,046), Mumford & Sons ($523,902)… ”
Fixing performance fees will “drive massive investment in the space, accelerating the growth of the overall sector, and just as importantly accelerating the development of new technology that leverages the incredible power of the internet to build and activate new audiences,” the post concludes. “Artists, this is your future. Own it.”
Baloney says Lefsetz. “What he’s saying is if you let me pay less, the sphere will grow and you’ll make tons more money! Never mind that this is anathema to Pandora’s shareholders . . . ”
The Lefsetz screed brought a sharp rebuke from the Mark Ramsey media blog:
This is ludicrous and indicates a lack of understanding of both capitalism and macroeconomics. Pandora’s shareholders want profit. And more Internet radio means a healthier ecosystem which increases profit. The pie gets bigger. And it sure beats the kinds of losses which happen when content owners strangle the proverbial baby in its crib. How much do shareholders like that scenario?
The Lefsetz post is marred by some pretty awful rhetoric. It calls Westergren and his fellow streamers “self-satisfied pricks” [WTF?]. Nonetheless there are serious issues to be vetted here. Beyond the stupid potty talk, both sides are accurately characterizing the implied bargain. Pandora is asking artists to take less on the promise that a pure play sector that doesn’t have to pay something like half of its revenue for performance royalties will put those savings into sustainability and growth, and that will ultimately kick back to musicians and singers.
The question is whether that promise will pan out, or is Westergren asking musicians to take (dare I say it) a leap of faith? We are in the early phases of that discussion. Hopefully more mature voices will keep it going.
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