What Pandora Pays Top Artists

An album is more feasible to make on one's own, but it's also much more likely to be listened to many more times. I've heard my favorite albums far more than I've watched my favorite movies. But at the same time I realize how much it costs to produce a major motion picture, so I'm okay with paying ten bucks to sit in a theater for two hours. They provide me different kinds of value.

That quality/impact has always been what gave creative works value—the scarcity of physical distribution only enforced that value, it didn't create it. A physical copy of an album nobody liked couldn't be sold for $15, even though it was no more sharable than a physical copy of an album everybody liked. The problem facing creative works with the internet is finding a way to make money off of producing high quality works when you can no longer rely on physical scarcity. But that doesn't mean there is no value there anymore: genius and talent are still scarce.

Moving to models built on services like Pandora and Spotify could turn out to be a good thing if it shifts rewards in favor of things with lasting quality, not just a "make two good hits and ten crappy songs to push a bunch of one-time album sales." But I think they're going to have to bring in a lot more revenue to be really effective at rewarding truly talented artists. But hey, radio is able to do it, and that's a "free" service too.

Perhaps this is a slight tangent, but are you sure about that? It seems daunting now, but that's probably because you're at the rock bottom of the learning curve. I'll bet there has been more than one brilliant musician who's looked at their sequencing software and thought "I could never write this". I don't mean to suggest that there's a Mozart inside everyone, but I don't see why we couldn't teach musical literacy as "easily" as we teach programming. Music Engineering 101?

Maybe more to the parent's point, it's also possible that it doesn't require a Mozart to make a popular song today. PSY's Gangnam Style is clever and fun but if you turn off the video and don't understand the lyrics, the music is basically sampled from 90s trance hits. You could make a similar argument for Lady Gaga. The major creativity seems to be something layered on top of the music. How notable would OK Go be without the brilliant videos? Yes yes, I love their music too - but there's a lot of great indie rock out there.

Maybe there is a supply/demand curve for music. It's an interesting perspective that I have never heard before. Also consider: Old music doesn't "expire", so as new music is created, it increases the total supply. New bands are not only competing with each other, they're competing with every band that has ever released music.

In their latest quarter (Q2 FY2013) "Cost of Revenue" made up $68,036,000 on revenue of $101,267,000. Of that, "Content acquisition costs" were $60,522. That means royalties make up a whopping 60% of all revenue. They're not making a profit and have lost money in FY2012 and FY2011.

0. http://investor.pandora.com/phoenix.zhtml?c=227956&p=iro... (see Historical Financials).

It is a different royalty than publishing royalty which is BMI/ASCAP and those monies are sent directly to the label and they decide how to dole it out.

FYI terrestrial radio pay's 0% of revenue for performance royalties, Satellite Radio pays about 8% of revenue and Pandora pays around 50%

This unfair system of royalty payments were set up by the RIAA mafia in the mid 90's to discourage Internet radio since it would be a direct competitor to the old guard.

That is why there is current legislation introduced 4 weeks ago to bring parity to the royalty system. Why should a song that is played on FM radio pay a different set of royalties than one played on Satellite or one streamed on the Internet?

I personally have received several checks from internet streaming, for some big hit songs I played on as a session musician, yet those same songs, which were played tens of millions of times on terrestrial radio, paid me NOTHING, because terrestrial radio does not pay performance royalties.