Pandora Co-Founder Gives Two Reasons Why Royalty Decision Sucks

Illustration for article titled Pandora Co-Founder Gives Two Reasons Why Royalty Decision Sucks

We asked Pandora's co-founder, Tim Westergren, if he would like to discuss the decision of the Library of Congress's Copyright Royalty Board to uphold its decision to charge new crippling rates to Web-based broadcasters like Pandora. Tim responded: "I think there are two main points that would be great to make, both regarding dangerous perceptions floating around right now."

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Two misperceptions about Internet radio, according to Pandora co-founder Tim Westergren:

First:

...higher rates mean more money for artists. The reality is that the few Internet radio companies that opt to continue (and it will be VERY FEW) will be forced to license directly from labels. In this scenario, the artist share of the revenue will shrink to almost nothing as the monies will go directly to the label and be subject to the usual artist royalty rate (post-recoupment) of single digit percentages. So not only will this eliminate the vast majority of online stations that are the ONLY source of indie music exposure, it will take what little revenue is left from the artists.

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Secondly:

...contrary to any statements by SoundExchange or RIAA representatives, Internet radio is not a highly profitable business nor will it be. For most (including Pandora), it's still a money-loser at the old rates that we are working as hard as we can (15 full time sales people are on the job) to turn profitable in a year or two. The growth figures put out by JP Morgan (recently revised downward from $500M to $150M) don't mean profitability—they mean more revenue which comes with greater costs. It's a thin margin business at best. No one's profiteering here.

For more about this situation, you can visit SaveNetRadio.org.

Copyright Royalty Board [Gizmodo]

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DISCUSSION

Oh, cute, the major labels (sure to be the primary beneficiaries of this move) are still trying to save their dying business model! It's so precious.

I'm not entirely convinced that this will automatically lead to the DEATH OF INTERNET RADIO as everyone is crying... if this money might actually get into the hands of the artists (it won't), I might even support it. The fact that these radio stations are small doesn't give them a free pass, just as I couldn't make a movie with a Justin Timberlake song in it and expect to pay a buck fifty in royalties just because I can't afford to pay what it costs.

Here's a thought: how about if online radio stations work to find and play independent artists, either unsigned, self-published or on labels not driven entirely by greed, and thus circumvent all this while also playing better music?

Support indie labels, support digital distribution, cut out the middle man and support services that connect artists directly with their fans.