It is not interesting to post a story which says "Pandora Paid Over $1,300 for 1 Million Plays" but it is very interesting to post a story which says "My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89"

I watched Mike Arrington (founder of TechCrunch) talk about PR on youtube at a startup seminar and he raised this exact point. Regardless of your agenda, a controversial story is far more newsworthy and will get you more coverage then a regular story.

Great insight - considering now a days PR is also becoming SEO.

By that I mean that a good PR firm provides a service of getting high-end backlinks from highly authoritative sites - media, etc.

"$0.02 cents"? Do you mean "$0.02", or "2 cents" or two hundredths of one cent, or something else?

Is this Verizon writing? ( http://verizonmath.blogspot.com/2006/12/verizon-doesnt-know-... )

Based on their cost of $0.02 cents per listener hour, I wanted to calculate how many hours per day my $36 yearly payment equates to (ignoring their operational costs):

($36 / $0.02) = 1800 hours per year

1800 hours per year = 4.93 hours per day

The original purchaser bought it for full price, and assuming I'm a major artist like Aerosmith, that's big money in the aggregate. A cd isn't rent, it means you get to enjoy that stuff for as long as you own it. If the original purchaser wanted to transfer that ability to someone else even for free, I don't have a problem with it. I don't see cds as somehow being linked to the original person's lifespan, or a time-value of how long he's likely to listen to it. It's the existence of the cd, period. The fact that he got three bucks for it, more power to him.

Now, if he instead ripped the cd to continue his enjoyment and then sold or gave it away, to me that's the same as keeping the cd and letting you rip it (either for free, or for three bucks). That's not okay. He clearly liked it enough to "keep" it, so he should have kept it. In which case (if everyone else acted the same way), you would have bought a new copy, which means more money for the artist.

At any rate, you, by purchasing a used cd, did nothing "wrong" from any perspective in my book, because it can't be on you to ensure that the seller will no longer listen to or enjoy the music. But people that sell their used cds, technically they're stealing if they keep their rips after they sell it. Or at least "stealing", in the sense that it's the same as letting someone else rip/burn their copy.

http://www.wired.com/listening_post/2007/05/used_cd_sales_l/

I'm sure the labels are very happy to keep making the same margins they used to with these new distribution channels. The music industry is doing fine here, it's just the artists who are getting a small piece of the pie.

Ironically that song was a hit exactly 20 years ago... so no, it managed to do just fine without a streaming service.

But yeah, I would never go back to the old model of radio and music only being on physical media. In fact, we can't at this point.

> Playing music is a joy, something you can enjoy whether you make money or not from it.

Other than an on average greater passion than in other professions, music sometimes has the potential to be "just a job". You might dream of coding the next greatest physics engine, but you are stuck making the same boring apps in a domain you don't care about. Similarly, you might dream of composing and playing rock operas but you are stuck doing crummy session work for R n B artists. It's not that R n B is bad, but not every musician is necessarily a person that has passion for all kinds of music and all kinds of gigs in the music industry.

But yeah, making a living from it is not a right, just like any profession.

Here's another thing I don't get thought. I listen to albums every day on Spotify. I also bought a few on iTunes. How much of that $9.99 does the artist get for my unlimited usage?

Well, Pandora is a public company, so they have to disclose all that stuff. Which means we can look it up! Transparency is awesome.

According to their latest annual report (http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9M...), in fiscal 2012 Pandora brought in $274 million on $285 million in operational expenses.

Of those expenses, $149 million were for content licensing. Product development accounted for $13 million.

Of the money they made, the vast majority ($240 million) came from advertising.

If you truly want to support the artist, go to every single one of their concerts and buy three t-shirts.

I'm guessing I've bought dozens of CDs and gone to multiple concerts thanks to Pandora.

Now, someone who makes a lot of money off of radio plays, and sees radio plays shrink as Pandora plays increase, they might still feel they have a beef due to the lower songwriter royalty rates.

Spotify, on the other hand, is different. Spotify does rob album sales.

Also, Pandora does not complain that their largest expense is music, it complains it is so large that it prevents the possibility of them being profitable. It may be true or untrue, but the opinion in USA Today distorts it. Pandora doesn't claim it doesn't want to pay it all, it just wants to pay so that they still could be profitable.

Additionally, even if Pandora did make enough money per listener, the fact they spend a large portion of their revenue on royalties indicates that if this portion increases, their profit margins will vanish very easily. This is not contradicted neither by size of their IPO nor by number of their listeners, because this is a marginal game, not summary. So their argument is "if royalties increase, we die". The opinion you quote does not refute this. Of course, you could say "ok, so Pandora dies, who cares, good riddance, they should have built their business better" - but that'd be completely different argument. And on this argument one should notice that in this case the authors probably would get $0 royalties for internet performances if no viable business would be possible for it.

Part of that is their Music Genome Project where human beings listened to every song Pandora hosted and rated every aspect of it. I'm sure now they just have a ton of other useful data from listening habits. Regardless, I think the music could almost be seen as secondary.

If all Pandora wanted to do was have me pay $36 dollars for a weekly, automated newsletter telling me of new songs I might like and then collecting my feedback for future newsletters made for me, I'd likely pay for that. They could even alert me to new concerts in my area. Of course, the music streaming ties that all together in a really compelling way.

So, I think if anything you could say that about 50% to musicians and 50% to programmers and staff and overhead sounds about right. Hopefully they manage to eek out a profit to stick around.

They'll be greatly missed if all that's left one day is iHeartRadio and the same old industry pushing the same old method of selecting hits.

Pandora is undeniably a good way to listen to music, and all anyone wants is to ensure they have a fair way to compete.

No one likes seeing artists go hungry. But we all also recognize that if there's anyone being unfair to artists, it's the mega industry from the prior era.

The new industry involves artists owning their work and paying $50/year at TuneCore or similar companies to get their music distributed to companies such as Pandora. Or, they sign up to traditional album sellers like BandCamp or CDBaby. It's simply the most efficient way to do it now.

Absolutely we appreciate the music industry for almost a century of fantastic art and culture. But they either need to adapt or gracefully accept their new role, which is a purveyor of American classics and the niche hype machine for the few mega acts of pop music who actually get good terms on their contracts with major labels.

Why is that obvious? If violating copyrights was impossible, I would probably just be exposed to a lot less music, and would thusly end up spending less on music (I pay for iTunes Match, usually spend $50-100 a year on albums, and $100-200 a year on concerts).

Oh? If Pandora already spends half its revenues on the music, how is observing that doubling (for example) royalties would cause music costs to eclipse revenues, bullying and threatening? It sounds like Pandora is the one that should feel threatened.

http://blog.pandora.com/2012/10/09/pandora-and-artist-paymen...

I don't think that's obvious, I think it's an empirical question. With N subscribers, Pandora currently makes $36 * N per year. If they raise the cost to $50, they'll make $50 * (N - x), where X is the number of subscribers they'd loose.

Of course, all the profit is basically split between the licensors. Pandora currently keeps nothing.

You are suggesting that 50 * (N-x) is "obviously" bigger than 36 * N, but I would suspect that Pandora has already tested it, and $36 provides the maximum possible revenue. If they haven't tested that, they are truly incompetent.

The Pink Floyd article mentions their IPO, but doling out IPO money to licensors is a temporary solution, and probably one Wall Street wouldn't take particularly kindly to. So the choice really is "the current licensing terms, or $0".

Citation?

Artists, get over yourself. The market is huge now, and your product value is approaching zero. But keep on flailing in the noose.

EDIT: Half credit. Per dllthomas, "Per the article, FM radio pays royalties to the songwriter but not the performers."

To be a prospering model, rather than a struggling one, they might have to raise prices on customers while trying to hold royalty payments to a steady %.

The biggest potential threat to Pandora, other than the labels killing them with royalties, is Apple and Google.

Obviously, there is no "right" to earn a living in the legal sense of a right. But it seems moral to say that if someone puts in average work, and they're average talent, they should make an average living out of some industry that is still in demand.

You raise an interesting point about the producers and salespeople of the industry. Why shouldn't they have a "right" to make an average living as well. Indeed, but they could also follow the technology, eg from "curating" a record store to "curating" a recommendations website. Or, since they also have more portable jobs, they could produce or sell other products or talents.

The musician, on the other hand, is stuck. If musicians can't live from their music, even if they are in demand, will stop making music for us consumers.

Many unions force companies to pay workers inflated wages which are well above the current rate.

In any case, the content is only an aspect of the value, and without the value add many services would be rather useless. If the cost of content dwarfs the use's value add, something with potential becomes something untenable.

I mean without streaming, multiple platform support, browsing/searching, etc., what would Netflix be? The delivery method and interface themselves have value, and it's not insignificant at all.

Remember the purpose of copyright isn't to give creators rights. It's to drag as much out of them for as little cost as possible for the sake of the enrichment of society as a whole.

I guess maybe this would require a corollary of compulsory licensing, but I'm pretty sure that already exists to a large extent.

As well they should--it's an ultra-competitive field, swarming with competitors, the market is so flooded it makes New Orleans after Katrina look like a kiddie pool. Unless you're the cream of the cream of the crop, you're going to struggle in this industry. And not one of the content creators has an inherent 'right' to make a profit from their work. The market decides winners and losers, and inevitably in this market it's going to be mostly losers. Whether or not it's 'fair' is irrelevant, life isn't fair.

So there is a cost to deliver songs (servers, bandwidth, devops, engineering) which is analogous to the old radio days of the engineer, power, transmitter, tower maintenance, etc. And there is the revenue from advertising and/or subscriptions. And there is the royalty rate.

If you are managing your on-going costs to a minimum, your ability to sell advertising/subscriptions is a market thing (people will or won't buy the service based on the perceived value to them) and then your royalties come out of that.

How would make an argument that royalty rates aren't pertinent?

I think royalties should be set in a way that maximizes what I'd call the versatility of utility. If royalty costs are far beyond the actual infrastructure or service costs, it seems as though entire industries and uses of content cease to exist.

It also seems pretty clear that huge differences between prices and real world costs are what lead to extensive piracy - people develop a perception of being cheated when you try to charge $25 for an e-book or album download. On the other hand most consumers seem to feel fine about paying $1 or $5 for a song/album/e-book.

You could argue that 'oh, the creator should have the right to control what they make as much as they want and charge whatever they feel like,' but it seems pretty clear that given free reign, copyright holders feel entitled and abuse copyright in ways that entirely undermine the whole system.

I'd say that if you believe in copyright there's a legitimate interest in restraining royalties to reasonable amounts so as reinforce the legitimacy of the whole system. After all, the perceptions of gouging and rights abuses create large masses of people like me who no longer believe in copyright as a whole to any great extent.

Ensuring the liberalization of restraints and apparent reasonableness of exercised privileges allowed creators seems key to creating a copyright institution that can survive and appear legitimate in the long run.

No I'm not. If something is not profitable, then do something else that is. Don't complain that you're not being paid enough.

No one is entitled to a meal in a capitalistic society. You have to "earn your keep" so to speak. Everyone does have to eat, but that doesn't mean you're entitled to eat off of your music. If music isn't working out maybe these artist should get a "real job".

Most of these artist are still following a a business model that is broken. I'm not sure why they feel they are so entitle to high income. Maybe it has something to do with that carrot that the record industry dangles out there. Every feels like they should be making Beyonce money or something. Why is it that radio royalties and album sales seem to be all they focus on when they get such a little cut anyway. It seems like building a following and then getting that following to pay to go to your concert and buy your merchandise directly is much more profitable.

There are some musicians that recognized they would never make as much as they would like in that business. Look at someone like 50 cent. He realized that royalty payments wouldn't be enough. From the start he created a brand around his name and his crew G-unit. From that they were able to sell clothing, get exclusive sneaker deals, negotiate for their own label, etc. With that money he invested in outside deals like Vitamin water which made him much more money than his music did when it was sold to Coca-Cola. This is someone that understands the business and how to leverage it to benefit you more than it benefits the industry.

It's been shown time and time again that artist do tend to get fucked, but it's not just internet radio providers doing said fucking. How much of the royalties get paid out to labels, managers, and anyone else that has their hands in the artist pocket. Maybe if they could negotiate better terms they would get a bigger piece of the royalty pie.

Look, I get paid what I think is a decent amount at my job. My employer has no obligation to pay me that much. They do it because I have valuable skills in a competitive market that they are willing to pay for. I also provide much more value than the salary that I earn. If for some reason those skills weren't desired or I wasn't able to make a living from them I would attempt to move on to something new.

I really don't know why I'm rambling so much. I do wish artist could make a living, but I don't think they are entitle do earn a living wage making music. Watching this industry try to keep their failing business models alive is pretty interesting though.