Pandora has been getting a lot of flack for this artists’ post titled “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!”. I disagree with that post, here’s why:
1.) You shouldn’t be mad at Pandora, you should be mad at Congress’ tiered unleveled playing field for treating internet radio royalties differently than legacy AM/FM radio. Pandora can barely swim above water because their royalties are over their heads. Sure, they’re a publicly traded company, so maybe they’re being dramatic about it, but that doesn’t make the double-standard law any better.
2.) Pandora is most likely helping sell those $17 t shirts
As I mentioned last month, the old business model allowed you to only make $1 off of a song per person. And that was it: $1, sale is done, no more money. No viral sharing, no playlists, sandboxed, no charts, nothing. Now that an artist can average $16.89 per year per song - that’s incredible!
The difference is that the old model consisted of releasing 3 CDs over a lifetime to a million fans, whereas today’s model consists of releasing 30 CDs over a lifetime to a few thousand fans.
Not only that, but Spotify has actually increased paid downloads, so I can assume that
1.) Pandora’s royalties over a lifetime amount to greater income than retail sales
2.) Pandora actually increases retail sales, too
3.) Pandora, like AM/FM radio, increases ticket and merchandise sales (exposure)
So I have no problem with Pandora’s current royalty payments. I also agree with their recent loophole purchase of an AM/FM station. (I don’t have music on Pandora simply because their odd submission rules, but oh well).
Granted, Pandora and Spotify (and Apple Radio, etc.) follow slightly different technicalities in royalty payments, but they’re similar enough to draw the comparison. I pay out royalties to the songwriters whose music I cover, and the musicians and publishers of each respective song will receive that split for eternity - and trust me, they’re all very happy.
Similarly, when looking at the Youtube model, some publishers want synch license fees so people can upload their cover songs to Youtube, then they also want to claim the streaming royalties. But they’re missing the point. They should forget the upfront fee and make it easier to upload music, then use Youtube’s Content ID so they can make royalties on every stream. The royalties over a lifetime eclipse any synch fee. Plus, it’s trillions of half-penny transactions versus 10’s of large transactions - as a Youtube partner, I can tell you that the former eclipses the latter. And guess what? Youtube increases iTunes sales.
So welcome to the new model, nothing like the old model. It’s much better.