Web music streaming service Pandora has been hailed as one of our Most Innovative Companies for several years in a row, but more recently it's been the focus of a raging debate over how musicians and songwriters can be paid fairly in the world of streaming media.
The issue is simple. About half Pandora's earnings currently go to musicians' royalties.
Pandora, which had a successful IPO in 2011, is now petitioning Congress to pass the so-called Internet Radio Fairness Act to renegotiate the royalty rate web streamers pay to both performers and songwriters (which are separate kinds of royalties). The company has said it wants to pay a percentage closer to what satellite radio companies pay, which is just 7.5% of revenue. This would likely mean huge cuts in payments to artists, who already feel that they're earning peanuts from streaming.
David Lowery, the lead singer of Cracker and Camper Van Beethoven, wrote a blog post last month that was headlined "My Song Got Played On Pandora 1 Million Times And All I Got Was $16.89, Less Than I Make From A Single T-Shirt Sale!" It has since seen over 1 million views. (Lowrey's figure is based on his 40% songwriting credit for the Cracker song "Low"; the band also earned about $600 in performance royalties for the 1 million plays.) And the members of Pink Floyd wrote in a USA Today op-ed, "Nearly 90% of the artists who get a check for digital play receive less than $5,000 a year."
"It's an uprising in the making among songwriters," Lowery told Fast Company. "It's like the French resistance or something—it's underground because a lot of artists don't want to talk about it. Nobody wants to get turned into Lars Ulrich [drummer from Metallica, who spoke out against Napster] even though he was right. People are afraid to alienate their fans."
Lowery admits that the problem isn't just Pandora, but more broadly a bureaucracy that fixes prices and perpetually lags behind the reality of listener experience in world in which every song exists in the cloud. Still, he says, "Pandora deserves a lot of this blowback because they are the ones most aggressively trying to manipulate the government apparatus that governs the price we pay for our songs."
Pandora founder Tim Westergren countered Lowery and other critics in a recent blog post, saying his company's true interest is "the future of music, and an ecosystem that allows those who create it to thrive." Still, the accusations and counter-accusations continue. Record labels, the web-streaming services, industry groups like the RIAA on one side, and the American Society of Composers, Authors, and Publishers (ASCAP) and BMI on the other are squaring off with independent artists caught in the middle. The issues include "compulsory licensing" (individual artists have no choice whether their music is played on Internet services), and the difference between a "spin" and a "play"—the former is what Pandora calls it when just one person streams a song, versus when that song is broadcast or even webcast over an Internet radio station to a potential million listeners. Then there's the age-old distinction between promotion, which prompts discovery of new music and is generally done for free, and consumption, when listeners are choosing to hear a specific song or artist they already know. In the old world, promotion was done over the radio and performers earned nothing, while consumption happened at the record store and concert hall where performers got paid. Today, a web service can provide both at the same time.
What Lowery and other songwriters want is freedom, as artists, to experiment with business models, pricing, and availability of songs on web-streaming services. Let the kids discover a classic CvB track for free, like "Take the Skinheads Bowling," which I did, via mixtape, in the 6th grade. But if they want to hear all of the 1987 EP Vampire Can Mating Oven, they should pay the artist more, perhaps via a premium subscription. "I know where things are going," Lowrey says. "I'm 52, and my kids and I stream Spotify via Bluetooth into the stereo in my truck. I've probably made the bulk of the money that I will make in the music business, but for the people who come after me, I want to make sure they have something more fair than they're being offered now."
[Broken Radio: Wayne Abraham via Shutterstock]