musicFIRST artists are speaking out against the Pandora royalties structure

MusicFIRST–a 127-person roster including musicians from all genres, including OKP names like Robin Thicke, Eric Roberson, Nas, Ludacris, Common, Janelle Monåe, CeeLo Green, Lupe Fiasco, Raheem DaVaughn, and Missy Elliot. Backed by the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA), the AFL-CIO, and the NAACP, musicFIRST is rallying against the Pandora Royalties structure — more specifically, against its push for Congress to pass the Internet Radio Fairness Act (IRFA), which if passed will reduce the amount of money Pandora and other Internet radio services have to pay for music.

There are two perspectives on the legislation: Pandora’s and musicFIRST’s. In an open letter against the IRFA, musicFIRST states:

“Pandora is now enjoying phenomenal success as a Wall Street company… Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians rely upon? That’s not fair and that’s not how partners work together.”

Instead of pushing for legislation, musicFIRST argues that Pandora should approach musicians directly to negotiate payments. On the other hand, Pandora makes the claim that things are not fair as they currently stand:

“Today, the discrimination is extraordinary. In 2011, Pandora paid over 50% of revenues in performance royalties, while SiriusXM paid less than 10%. Internet radio brings millions of listeners back to music, plays the songs of tens of thousands of promising working artists, enabling them to build their audience while receiving fair compensation.”

While Pandora would like to believe that they are combatting unfairness by lobbying for IRFA, the Recording Academy (another musicFIRST supporter) believes differently. In a letter of their own, they argue that Pandora is not addressing the real inequality in the radio industry: “terrestial radio pays nothing… Radio broadcasters are the only business in America that can use another’s intellectual property without permission or compensation.” Ultimately, this whole dispute strikes me as odd. Basically, a whole bunch of rich people are trying to stay rich or get richer. Am I the only one who’s seeing it that way? What do you think of the pandora royalties structure, players? Speak your truth in the comments section.

Comments

  • troubleman81

    over the last year i started researching much of this info with interest in starting my own station. its best to reach out to artists personally. the music biz is a dirty game and the artists are getting screwed in all this. it shouldnt even be a question for congress resolving the issue. their product, their property, their money. simple.

  • Lukas Buenger

    I have to say, that I fully agree with the author’s opinion. I respect the likes of Common, Nas etc, but their claim to spearhead a movement towards monetary appreciation of musical art in general is a little misguiding. Although these musicians lose a lot of money they rightly deserve through companies like Pandora, the fact that they’re important enough to care about these kind of royalties means that they’re already known to a wider audience and therefore already made some significant amount of money with their music.
    For unknown musicians such platforms are indeed an opportunity to get heard. At least once in a while. And their chances to get heard diminish with every dollar the listener has to pay for the service, radio, whatever. In some cases they even pay for getting their demos reviewed.
    Long story short: Pandora needs Nas because without popular music they would be irrelevant or niche at best and Nas needs Pandora and the likes to get payed. However, its a game that gets played without the slightest chance of the little man to get involved.

  • http://www.atribecalledx.com G_The_SP

    One of my main concerns is that there a great number of independent artists who will negatively impacted by this. Also, not all people who make music are rich, and even some people who are known don’t have as much money as folks assume they do. It’ll be interesting to see how it all turns out in the end. I’ve been using Pandora mobile almost everyday for the past month. If things get ugly with this, I’ll switch back to Spotify mobile and will use their radio instead. I’ve been a Pandora user for about 6 years now and really dig the genome concept. Maybe i’ll just switch back between the both of them.

  • Ian

    I’m not sure Pandora’s argument makes sense. They say they pay 50% of their revenues for licenses, and Sirius/XM pays 10% of their revenues. So what? In what other business is it Congressionally mandated that competitors pay an equal percentage of their revenue on some fixed cost? So long as the industry isn’t discriminating in its license fees and charging Sirius/XM a disproportionately small and unreasonable fee in comparison to Pandora, then what’s the issue? Sirius/XM has a different revenue stream – exclusively through subscribers – than Pandora, which generates revenue by a combination of premium subscriptions and advertising. Sirius charges for its service, while Pandora effectively gives it away to the end-user.

    Here’s one way to look at it: say both companies pay $1 for all of their music licensing. Sirius/XM earns $10 in revenue, but Pandora only earns $2 in revenue. Sirius is only paying 10% of its revenue for licensing, but Pandora is paying 50%. Is that unfair? I don’t really think so. I think the licensing is a cost of doing business, and if Pandora can’t afford to obtain what is necessary to its business – namely, music – and still turn a profit, it shouldn’t be going to Congress and demanding that it be relieved of paying market value for the music. That is called the free market – if you can’t make a profit, you go out of business. The artists who create the music shouldn’t be penalized because Pandora has a bad business model. Lets be real here – this is about trying to satisfy people’s insatiable appetite for free music. I say let the artist determine if he wants to give away his music for free, or if the demand for his music justifies not giving it away for free. Congress shouldn’t be stepping in because Pandora isn’t making as much money as Sirius.

    Now, I grant that I don’t know all the facts, but based on the snippet of argument from Pandora in the story, that doesn’t sound like a persuasive argument to me.

  • Zuko

    I co-sign Ian’s remark and add…
    Atlas could always Shrug

  • undeadsinatra

    I’m too lazy to do all the research, but I’m willing to bet a good chunk of the artists who signed this all share the same management. Or publishers. Or lawyers.