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Opening Pandora's music box
June 27, 2013 6:58 AM   Subscribe

A couple of days ago song writer David Lowery blogged about the low royalty rates streaming music service Pandora paid him, compared to terrestrial broadcasters: "My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make From a Single T-Shirt Sale". Understandably, this caused a bit of a commotion in music blogging circles, but perhaps this was unjustified. Michael Degusta does some digging and finds out that actually, Pandora paid $1,370 for these million plays in royalties. He also explains that Pandora actually pays more royalties than terrestrial radio stations.
posted by MartinWisse (60 comments total) 15 users marked this as a favorite

 
I'm still baffled how in this day and age the companies can get the most of the royalties. Not even getting into the punishments for pirating are way higher than violent crimes.
posted by usagizero at 7:10 AM on June 27, 2013 [3 favorites]


It also shows a little bit of economic ignorance on Lowery's part. Even though he may not make a lot of money on the plays that he gets on Pandora, those plays do not represent lost sales. They are potential sales. Some of the people who listen on Pandora will like his songs and then go and buy the single or album, for which (presumably) he gets a higher royalty rate. Some may even buy tickets for a show.

Pandora is excellent for song discovery, and if they have to pay more in royalties, that will change: they will do more cost-benefit analysis and come out paying high royalties for really popular songs (the "Call Me Maybes" of the music world) in order to maintain their credibility with pop listeners, and low royalties to bands and labels who accept low royalties in order to maintain variety. The net result? Less exposure for the lower end of pop music.
posted by sonic meat machine at 7:16 AM on June 27, 2013 [8 favorites]


He's being really strange here, first he admits that he's only talking about a small portion of the money he made (well some goes to my band mates, and I did get extra for performing). And then the comparison is to Sirius which has a count of 179, but it broadcast to maybe _more_ than the one-million direct plays off Pandora? And terrestrial radio is actually 13,373.78$ for the song "Low" and it looks like it was broadcast 13,797 times. So I'm not really sure it it's comparable or sensible.
posted by Napierzaza at 7:17 AM on June 27, 2013 [1 favorite]


Song writer sucks at math: film at 11:00.
posted by yoink at 7:19 AM on June 27, 2013 [3 favorites]


Or: Song writer lies about compensation to generate attention; film at 11:00.
posted by IAmBroom at 7:20 AM on June 27, 2013 [5 favorites]


Guys, he's a heck of a lot more than a songwriter, whatever his relationship to math. Founder and lead singer of Camper Van Beethoven and Cracker, excellent performer and musician.
posted by oneironaut at 7:23 AM on June 27, 2013 [3 favorites]


On the other hand, I owned his most popular album, but I'd probably totally forgotten about Cracker if it didn't come up occasionally in Pandora.

Actually, that's not entirely true. Chicagoans can see them for free July 6 at Windy City Rib Fest in Uptown on July 6th. And every time I walk pass the advertisement, I make the joke about how low (like being low) they've sunk. Which admittedly isn't nice.
posted by MCMikeNamara at 7:25 AM on June 27, 2013 [3 favorites]


Especially since I will probably go see Cracker at Rib Fest.
posted by MCMikeNamara at 7:28 AM on June 27, 2013


I'm still baffled how in this day and age the companies can get the most of the royalties. Not even getting into the punishments for pirating are way higher than violent crimes.

Their value added is much lower these days. The number is higher because they essentially own the apparatus for administering royalty payments. Anyone who invents a service not owned by them will do the world a great favor.
posted by Ironmouth at 7:29 AM on June 27, 2013 [4 favorites]


He specifically says he's talking about songwriting. The lie is comparing 16.89 (songwriting) with 1370 (songwriting plus performance.)
posted by Wood at 7:29 AM on June 27, 2013


Anyone who invents a service not owned by them will do the world a great favor.

Self promotion and direct royalties are already a thing. They just aren't popular things.
posted by roomthreeseventeen at 7:37 AM on June 27, 2013


David Lowery hates the internet, part 4.
posted by Horace Rumpole at 7:38 AM on June 27, 2013 [12 favorites]


Regardless of the numbers it seems problematic. The engineers who maintain Pandora's systems, the networks in between, etc are all almost certainly getting more money per year, probably by 2 orders of magnitude, than artists and creators are individually getting for their creations. The sales, management, etc roles too. And there are going to be dozens if not hundreds of people running Pandora.

So just like the traditional recording company (& radio etc) model, some people are being paid living wages. But it isn't the content creators they depend on.
posted by R343L at 7:38 AM on June 27, 2013


David Lowery has a history of hating record companies too.
posted by jeffamaphone at 7:39 AM on June 27, 2013


I karaoked Teen Angst on my birthday this year, I think I'm going to paypal him a few bucks for the pleasure.
posted by vespabelle at 7:39 AM on June 27, 2013


Song writer sucks at math: film at 11:00.

I'm not so sure he sucks at math:
Lowery is a trained mathematician who has worked as a "quant" (a derivatives trader and financial analyst) and has started a large number of music-related businesses, including a studio, a record company and a publishing company
posted by Fidel Cashflow at 7:52 AM on June 27, 2013 [13 favorites]


Song writer sucks at math: film at 11:00.
Or: Song writer lies about compensation to generate attention; film at 11:00.

o man thank zod I gots me the dual recording tivo
posted by robocop is bleeding at 7:58 AM on June 27, 2013 [9 favorites]


Pandora probably owes me somewhere between a fraction of a cent and a dollar, but I have no idea because they won't provide stats for my indie label. Just seeing some play counts would be nice.
posted by malocchio at 8:04 AM on June 27, 2013


It's important to note that not once does Degusta mention why Lowery wrote the piece in the first place - to counter Pandora's new campaign to lower compulsory royalties.
posted by NoxAeternum at 8:06 AM on June 27, 2013 [2 favorites]


Self promotion and direct royalties are already a thing. They just aren't popular things.

Someone has to create a direct royalties system that is easy to use and lowers costs to the creators, performers and the companies that play the music.
posted by Ironmouth at 8:16 AM on June 27, 2013 [1 favorite]



"I'm still baffled how in this day and age the companies can get the most of the royalties."

Most pimps don't give very much to the whores that do the actual work.

"The engineers who maintain Pandora's systems, the networks in between, etc are all almost certainly getting more money per year, probably by 2 orders of magnitude, than artists and creators are individually getting for their creations."

This may be true, but the engineers don't get a single cent the moment they quit working for their company. This is true even if the company still makes money from the fruits of their works (copyrights, patents, etc). I'm not sure many artists would like the idea of getting paid, say, 50k for a years worth of work, and be expected to put out 4-5 albums in that time (you know, working as full time employees), and never see another cent from their creative output.

I used to joke that for every milliion dollars an employee made Microsoft, they gave them a piece of lucite (I don't know if Microsoft gives 'ship-it' awards these days, like they used to in the 90s).
posted by el io at 8:22 AM on June 27, 2013 [6 favorites]


I'm not actually suggesting artists only get money while their actively creating content. I'm just suggesting that a system that doens't provide a living wage for all but a few isn't really that great.
posted by R343L at 8:31 AM on June 27, 2013 [1 favorite]


Lowery may have some kind of point to make, but as with his previous efforts it gets lost in hyperbole and axe-grinding.

Look at the headline: "My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89". It's not his song; it belongs to other people as well, which is why he only gets a small slice of the songwriting revenue. He didn't just get $16.89; he was also paid performance royalties, which he doesn't give a figure for in this article presumably because it would spoil the headline. Degusta guesses $234, out of a much larger total - again, because Lowery only owns a small slice of the rights.

It might also have been helpful to mention that a million plays on Pandora means that the song was listened to a million times; a few plays on a radio station in a decent-sized city could add up to way more. Fortunately Degusta is here to point all of this out.

Obviously Lowery is trying to whip up a froth of outrage against Pandora's efforts to either (a) reduce payments to artists so they can skim off even more from their basically parasitic business model or (b) reduce the unfair disparity between the royalties paid by Internet radio and the considerably lower royalties paid by terrestrial radio, depending on how you see it (here's Pandora's side of the story; a summary). But he could try a bit harder to make sense.
posted by A Thousand Baited Hooks at 8:43 AM on June 27, 2013 [3 favorites]


It's important to note that not once does Degusta mention why Lowery wrote the piece in the first place - to counter Pandora's new campaign to lower compulsory royalties.

It does seem to be addressed at the end:
None of this means Pandora ought to pay less in royalties. On the contrary, it seems quite likely that others should be paying more. And perhaps the non-artists involved in the transaction shouldn’t be taking 53% of the total for their services. But attacking Pandora with intentionally misleading statistics just undermines the credibility of the argument.
I think "don't fuck up your valid argument with misleading data" is an important message in its own right.
posted by muddgirl at 8:52 AM on June 27, 2013 [4 favorites]


David Lowery hates the internet, part 4.

Wow, just browsed Part 3 ("the internet") and I guess Michelle Shocked has been a bit off for a while now.
posted by Hoopo at 8:56 AM on June 27, 2013


I'm still baffled how in this day and age the companies can get the most of the royalties.

Yeah, I mean the Beatles built that giant factory that bought all that raw vinyl and pressed albums and put them in paper sleeves and drove them to the stores and then when digital came along it was really cool how Madonna and Bono wrote all that server code and Justin Bieber turned out to be a wizard at database infrastructure ... They totally should've been earning ALL the money.
posted by Cool Papa Bell at 9:04 AM on June 27, 2013 [9 favorites]


Actually, CPB, you picked a bad example because the Beatles did go into the record business and did press and release their own vinyl after they were established. Ever hear of Apple Records?
posted by saulgoodman at 9:10 AM on June 27, 2013 [2 favorites]


I still can't fathom the disconnect between Pandora playing 'Low' over one million times, versus all of the other songs he listed being played on other mediums just a few thousand times.

Something is strange there.
posted by kuanes at 9:11 AM on June 27, 2013


I ran a small indie label for a while myself and literally did put the CDs and covers in the cases by hand myself (I produced short-run CDs with my own short-run press set up). It's a fact. Separation of functional concerns is useful--by the end of that experiment, I was neglecting every other aspect of the work, from making the music to promoting it. You end up hating the whole business when you have to do it all yourself, but that's true for just about any line of work. It still doesn't justify the core producers--the creators--being the last ones in line to get paid for their work, or getting only a fraction of the returns.
posted by saulgoodman at 9:14 AM on June 27, 2013 [1 favorite]


That said, the one royalty check I've gotten from Pandora for another band on my label (I was administering their performance rights at the time) was much, much more generous than any other similar payment we received. Not sure how it was calculated as I don't think our boys got more than a million plays. (But who knows. Maybe they did.)
posted by saulgoodman at 9:20 AM on June 27, 2013


"It also shows a little bit of economic ignorance on Lowery's part..."

David Lowery is a professor of music business and economics. He's also worked as a derivatives trader and financial analyst.
posted by dabitch at 9:21 AM on June 27, 2013


So if not ignorance, then intentional distortion? Is that better?
posted by muddgirl at 9:31 AM on June 27, 2013 [6 favorites]


Someone has to create a direct royalties system that is easy to use and lowers costs to the creators, performers and the companies that play the music.

This problem seems like... 99% of the way solved with ad servers and ad serving networks. I bet someone could make an interesting system using OpenX's open source option, replacing IAB ad slot sizes with music files at varying quality levels.
posted by jason_steakums at 9:34 AM on June 27, 2013


Actually, CPB, you picked a bad example because the Beatles did go into the record business...

You're missing the point.

If you look over on the right side of the Wikipedia article you linked, you'll see a little box with data in it, and one of the things it says is "Distributors: Capitol Records, Universal Music Group."

Those are the guys that printed and sold the records, paying Apple a royalty. Apple was a record label, a holding company if you will, that represented and packaged artists for record companies to license music which they would then distribute.

It's like Lucasfilm's relationship with 20th Century Fox for Star Wars. Lucasfilm makes the movies, but 20th Century Fox managed the process of getting the movies printed and in the theaters. Fox got to make a chunk of money specifically for that service provided to Lucasfilm.
posted by Cool Papa Bell at 9:38 AM on June 27, 2013 [1 favorite]


So is the proper conclusion that Pandora pays more, but has so few users that it is meaningless to anyone trying to make a living off of their music?
posted by smackfu at 9:48 AM on June 27, 2013


Those are the guys that printed and sold the records, paying Apple a royalty.

Probably with an act as big as The Beatles, but that's not necessarily true. Not all distribution deals work that way. We had a deal with Allegro for one of our releases on another label, and yet, we were still responsible for pressing and delivering our own discs for distribution (well, our friend's label who released us was anyway).
posted by saulgoodman at 9:52 AM on June 27, 2013 [1 favorite]


In other words, most distribution deals are not P&D deals. And nowadays, physical distribution is largely irrelevant anyway. All other things being equal, there's no reason digital distribution channels shouldn't have much lower operating costs--computer infrastructure may cost money, but not nearly as much as warehouses, physical manufacturing materials, and fleets of transport vehicles.

It seems to me CPB, that there's a lot more variation in the levels of engagement and active management of their own business among recording artists than you probably realize. Either way, no one has said the artist should keep it all (unless they do it all, in which case, of course they should), only that the artist should at least be among the people who stand a chance of making a decent living off the work. One reason I tried to do it all myself (and I literally did everything from producing the recordings to designing the cover art and hand assembling the finished product in most cases) was to try to demonstrate that an autonomous, truly independent way of working was now possible. What I found was, yes, it's technically possible, but it's also impractical and unsustainable, and if you don't have a lot of money to pay to the right people, you're not going to get much traction regardless.
posted by saulgoodman at 10:02 AM on June 27, 2013 [2 favorites]


The third word of Lowry's piece is songwriter.
posted by Wood at 10:03 AM on June 27, 2013


I think the problem is that really what the world needs now is another folk singer like I need a hole in my head.
posted by Lutoslawski at 10:25 AM on June 27, 2013 [6 favorites]


--by the end of that experiment, I was neglecting every other aspect of the work, from making the music to promoting it. You end up hating the whole business when you have to do it all yourself, but that's true for just about any line of work. It still doesn't justify the core producers--the creators--being the last ones in line to get paid for their work, or getting only a fraction of the returns.

something a friend said to me a few months back continues to bug me. Something along the lines of, "... the only reasonable future for any kind of cool culture that involves electronic file sharing is some variant of crowd funding. Get your money up front. Do the work, then share it with no particular concern about tracking revenue etc, because the bullies (and their lawyers and their accountants and their legislators) always win once you get to that."

Which for many, many years has been colossally frustrating to many creatives. Which isn't to say crowdfunding (as we know it) is some kind perfect solution to anything. It isn't. But if you look closely enough, you start to see a fairly rational paradigm rising that might work.

1. artist defines and budgets project
2. audience kicks in required funds
3. artist does work, sets it free
4. rather than focus on tracking revenues etc, artists defines and budgets his next project

Here's hoping.
posted by philip-random at 10:32 AM on June 27, 2013 [2 favorites]


The third word of Lowry's piece is songwriter.

It's a distortion because AM/FM radio does not pay performance royalties at all. By comparing internet radio to AM/FM radio, but only looking at one royalty paid for a song, it supports a false claim that Pandora pays lower royalties than AM/FM.
posted by muddgirl at 10:44 AM on June 27, 2013 [1 favorite]


Or perhaps that performers don't deserve performance royalties, but I doubt Lowery intended to make that argument.
posted by muddgirl at 10:46 AM on June 27, 2013 [1 favorite]


Perhaps these gentlemen would have more credibility in arguing that Pandora shortchanges artists.
posted by Ber at 10:50 AM on June 27, 2013


If you're in a band that shares both performance and songwriting royalties, I can see where the distinction doesn't really matter that much to you. Money is money.
posted by smackfu at 10:53 AM on June 27, 2013


I dunno Ber, are they economics professors? {HAMBURGER}
posted by dabitch at 10:54 AM on June 27, 2013


Hell dabitch, I think Waters would argue he knows more than an economic prof. He's still a prickly bastard.
posted by Ber at 11:01 AM on June 27, 2013 [1 favorite]


1. artist defines and budgets project
2. audience kicks in required funds
3. artist does work, sets it free
4. rather than focus on tracking revenues etc, artists defines and budgets his next project


I guess step 0 is "give away enough work for free in the first place (and do enough probably backbreaking self-promotion to get it heard/seen) to get noticed so that people feel like giving you money up front"?
posted by Steely-eyed Missile Man at 11:32 AM on June 27, 2013 [5 favorites]


I think the problem is that really what the world needs now is another folk singer like I need a hole in my head.

Precisely. Mr. Business Professor Van Songwriter overlooks the bigger picture, which is that digital technology has upended the prior economic order in many industries. He's talking about nostalgia for a business that is never coming back, back when songwriters could make a living by being among the few of their infinite number whose music was distributed.

Now everyone can reach everyone else. That's good for the many, but bad for elites.
posted by spitbull at 11:42 AM on June 27, 2013 [2 favorites]


I guess step 0 is "give away enough work for free in the first place (and do enough probably backbreaking self-promotion to get it heard/seen) to get noticed so that people feel like giving you money up front"?

It's called making a name for yourself. It's got to be done somehow. I've got roughly three hundred Facebook friends at least half of whom I'd probably throw a few bucks at it if they hit me up via Kickstarter etc ...

How did I become aware of their talent? All kinds of ways.

Brian Epstein didn't just lift up a rock and find the Beatles. They made themselves heard. They impressed him.
posted by philip-random at 11:50 AM on June 27, 2013 [2 favorites]


Steely-eyed Missile Man, no that's called "step stay on 0" because you have no money(=time) to promote yourself so nobody will ever hear of you.
posted by dabitch at 12:08 PM on June 27, 2013 [2 favorites]


Now everyone can reach everyone else. That's good for the many, but bad for elites.

Actually, in my experience it works out better for the economic elite and well-connected, because despite perceptions, people still generally only run articles and feature stories on artists at the national level that are working with or connected to the industry establishment or otherwise able to get lots and lots of money for promotion. Most listeners still get their ideas about what to listen to from things they see, hear and read about from national media. Believe me, I've seen the difference in public response between campaigns where an artist had some money being shelled out for promotion services versus not, and getting noticed at the national level at all is very clearly less about talent or pluck than about the capacity of one's pocket book. So the current situation even more than before advantages those who are in some way starting out on third base. It's not the apocalypse or anything, but I don't think it's actually gotten better for working artists yet on average. Right now things are still a bit worse, and especially, a lot less predictable and stable.
posted by saulgoodman at 12:18 PM on June 27, 2013 [5 favorites]


Which is precisely why I said above that Pandora plays are valuable. Pandora doesn't care if you're famous or popular, it just plays based on traits in the music. Thus, if you are talented, and people like what they hear on Pandora, they represent a potential fan, a net boost which is not priced into the royalties model. In an industry where getting noticed is both crucial and difficult, the potential for that notice coming to people who have expressed a preference for your type of product—unmediated by traditional radio, which is god-awful for music discovery—is extremely valuable.

Which is why, even if he's a business professor, he doesn't understand business. (MBA disease!)
posted by sonic meat machine at 1:05 PM on June 27, 2013 [1 favorite]


Pandora want to pay even less, which is why they're lobbying the U.S. Congress for lower royalties on recordings. To me it seems that the elites/one raking in the cash are always not-the-artists. It was the record companies. Now it's the tech companies. Meet the new King, same as the old King.
posted by dabitch at 1:28 PM on June 27, 2013 [1 favorite]


I listen to Pandora at work all day, every day.
8 hours x 60 minutes = 480 minutes in a day, ÷ 4 minutes per song = 120 songs/day
120 songs x 5 days = 600 songs/week
600 songs/week x 52 weeks = 31,200 songs
31,200 songs x $0.0011 (royalty rate FTA) = $34.32

This does not count my time spent listening to Pandora to and from work, and on road trips.

My Pandora One subscription is $36/year. I admit I'm probably far towards the "heavy use" end of the spectrum, but still... it's not like Pandora is making bank off users like me.
posted by xedrik at 2:12 PM on June 27, 2013 [1 favorite]


I would suspect they are making money off advertising as well.
posted by Ber at 2:28 PM on June 27, 2013


I remember the days (35 years ago!) when I worked for a radio station. We kept logs of every song plaid (and records of every piece of music in a recorded commercial) to provide to BMI and ASCAP for songwriter royalties. As for performers' rights fees? There were none. Everything provided to the station was FREE!!! FREE!!! for "Promotional Purposes", because radio play was like a free commercial, right? Even for genres of music whose share of radio listening was several times their share of record sales. And, oh, yeah, the record company provided armfuls of copies of every record you played, and many that you didn't. The stations gave them away in contests - promoting the station much more than the music - each 'promo' copy had a "NOT TO BE SOLD" sticker on the label which many stations covered with a "I WON THIS FROM THE BIG 97!" And, during the time I was an employee, I rarely paid for a record album; the station's Music Director was my Free Connection. And we're talking a station that only played 45s on the actual air. What a racket. Let's not even talk about the Payola scandals where record companies paid for airplay - that was before my time - they just provided cases of their product instead of cash. Then, ten years later, I accidentally witnessed one of the top DJs at one of LA's trendiest radio stations - and one that allowed one "DJ's choice" play once an hour - receive a package with several LPs and a small package of what could be assumed the DJ's controlled substance of choice. Payola was still alive. I doubt it's changed very much even after all these years. Even when stations upload one copy of each song to the Music Computer, I'll bet they have a couple dozen CDs left over. And some other stuff. I repeat. What a racket.
posted by oneswellfoop at 3:04 PM on June 27, 2013 [1 favorite]


And I remember the local coffee shop I loved in Santa Barbara having to end their "Bring In A Tape And We'll Play It" policy and start their "Play Crappy FM Radio With No Good Stations In Town" policy thanks to ASCAP busting their chops.
posted by Samizdata at 3:33 PM on June 27, 2013 [1 favorite]


I listen to Pandora at work all day, every day.

I used to do that when they were available everywhere and I loved it to pieces for playing music I enjoyed and didn't know existed. The day I saw the note from the owner was a sad day indeed. I'm still waiting for that email. And I'd pay for their incomparable* services gladly.
Just a few more years, I hope, and the *IAAbylon will fall**.

*when I tried Last FM, I discovered that similar music = music from the same genre (!) or by someone with the same gender (!!) or from the same country (!!!)
** I hope, not think

posted by hat_eater at 4:22 PM on June 27, 2013


A Rolling Stones article about the online music industry and the royalties they pay.
posted by eye of newt at 9:32 PM on June 27, 2013


Is it true that you have sold your soul?"
I say, "Hey man, I don't know
Lend me a quarter won't you?
I'll call my accountant."

posted by Eideteker at 10:56 AM on June 28, 2013


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