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What Pandora Pays Top Artists

blog.pandora.com

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Re: What Pandora Pays Top Artists

#31

Post by rm999 »

mayneack wrote: post #24
guelo wrote: post #14

The RIAA takes all of Pandora's profits[1]. I think if they were smart they would back off and give Pandora a little breathing room to invest in marketing and tech. [1] http://www.google.com/finance?q=NYSE%3AP&fstype=ii&e...

For those of us not used to reading something like this, can you explain? Is the RIAA somewhere in here: "Selling/General/Admin. Expenses, Total"?

They have zero profit, so you could argue any single cost is taking away "all their profits". But I'm probably missing a more insightful point - maybe that the RIAA engineers the situation so that their margin is ~0.

Re: What Pandora Pays Top Artists

#32

Post by fumar »

stickfigure wrote: post #26
jimmar wrote: post #19

Earlier quoted context omitted.

Give me all of the top music software in the world and I won't be able to create anything worth listening to. Your statement is kind of like saying since word processing software and electronic distribution are widely available, books really aren't worth the price tag. It's the creativity and hard work that goes into books and music that makes it worth the price--not the cost of the distribution medium.

Give me all of the top music software in the world and I won't be able to create anything worth listening to. 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…

I agree that several of today's top performers are rehash 90's trance and euro dance. It honestly makes me laugh. I remember making similar music on Fruity Loops with Sonic Foundry Acid Pro as a kid. I had a midi keyboard and crappy monitors.

Creating digital music does have a learning curve...I had a rudimentary knowledge of music. I took a year of piano lessons. I could imitate some of the music I liked. The hardest part was creating something unique. I could be proud of.

Sequencing will always be fun for me. I have amassed some cool toys over the years. It is nothing more than a hobby.

Soundcloud is like a musicians github.

Re: What Pandora Pays Top Artists

#33

Post by thasmin »

dkrich wrote: post #29

I use Pandora and love the product. But every time I see this commercial with Tim Westergren where he states that the royalty system for internet radio is "deeply unfair" I can't help but wonder why he believes that to be true. Where is it written that all distributors should pay the same price for their wares? Wal-Mart pays Proctor and Gamble a significantly lower cost than small grocers. Why? Because Wal-Mart, quit…

The difference is that your example is in a free market and music royalty rates are controlled by Congress.

Re: What Pandora Pays Top Artists

#34

Post by earbitscom »

dkrich wrote: post #29

I use Pandora and love the product. But every time I see this commercial with Tim Westergren where he states that the royalty system for internet radio is "deeply unfair" I can't help but wonder why he believes that to be true. Where is it written that all distributors should pay the same price for their wares? Wal-Mart pays Proctor and Gamble a significantly lower cost than small grocers. Why? Because Wal-Mart, quit…

What you're failing to realize is that the per-stream fee that Pandora pays is exclusive to net broadcasters. Everyone else pays a percentage of revenue that is a manageable 7-8% for performance fees, and another 5.5% for publishing. Pandora's highly risky, per-stream fee is a number pulled from the asses of the RIAA and has no basis in the reality of what the music might be worth in advertiser dollars.

Why is $0.002 a fair price to pay each time you play a song? Where did that number come from? Why would Pandora pay this, but Sirius not?

When the largest, most efficient net broadcaster, after 11 years and over $300M in projected 2012 revenue, cannot optimize their way out of a -14% margin, what mathematical justification is there for this $0.002 figure?

The number is supposed to be based on a "willing seller, willing buyer" calculation based on the market rate of what companies are willing to pay, and yet the only rates that were allowed into these discussions were the mandated rates by the copyright royalty board - not the rates that independent labels might offer, or the companies that had royalty-free agreements, like ours (www.earbits.com).

You will be hard pressed to find a person more pro-artist than me, but the per-stream rate of $0.002 makes zero sense, if a per-stream rate makes any sense at all. Asking for neutrality across platforms seems more than fair.

The real reason the labels don't want to budge with Pandora is simple. The royalties go to SoundExchange, and then get distributed directly to artists - most of them unrecouped by their record labels. Labels want to destroy anybody whose royalties don't go through their accounting department, where they can file them away under unrecouped and keep every penny the artists deserve. That is the real reason for this battle.

Re: What Pandora Pays Top Artists

#35

Post by [deleted] »

dkrich wrote: post #29

I use Pandora and love the product. But every time I see this commercial with Tim Westergren where he states that the royalty system for internet radio is "deeply unfair" I can't help but wonder why he believes that to be true. Where is it written that all distributors should pay the same price for their wares? Wal-Mart pays Proctor and Gamble a significantly lower cost than small grocers. Why? Because Wal-Mart, quit…

[deleted]

Re: What Pandora Pays Top Artists

#36

Post by earbitscom »

guelo wrote: post #14

The RIAA takes all of Pandora's profits[1]. I think if they were smart they would back off and give Pandora a little breathing room to invest in marketing and tech. [1] http://www.google.com/finance?q=NYSE%3AP&fstype=ii&e...

Actually, that's not very accurate. Those performance royalties are paid to SoundExchange, a non-profit assigned to distribute the royalties to the artists. The whole reason the labels hate Pandora is because it's the only massive service paying hundreds of millions of dollars directly to the performers, without filtering it through the labels' accounting departments.

Re: What Pandora Pays Top Artists

#37

Post by forgotusername »

Sam_Odio wrote: post #28
mayneack wrote: post #24

Earlier quoted context omitted.

For those of us not used to reading something like this, can you explain? Is the RIAA somewhere in here: "Selling/General/Admin. Expenses, Total"?

I downloaded their detailed income statements[0]. The Google Finance income statement appears to be wrong. Google's income statements imply royalties of less than 8.5%. 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 l…

A few weeks back Google Finance was reporting GOOG's own earnings incorrectly. Most people with interest in such things recommend avoiding it like the plague

Re: What Pandora Pays Top Artists

#38

Post by earbitscom »

steve19 wrote: post #5

An artist with a sales rank of 17,000 on Amazon is making $138,567 on Pandora! Wow! I wonder how much Pandora makes (or loses) on that artist.

That's because Pandora only has about a million songs in their catalog, where iTunes has like 30 million. All Pandora has to do, and you better believe they did in order to write an article like this, is classify an unknown artist that sounds like Coldplay into the system. If you've experienced Pandora, you know that after a few weeks you hear the same music over and over on any given channel. Suffice it to say, across millions of artists and hundreds of genres, one relatively unknown artist with a lot in common with a massive artist is going to be played for a shit load of people a fuck load of times.

If you divide total Pandora royalties by the number of artists in the catalog, you'll realize that these "unknown" artists they're showcasing are outliers by a huge margin, and probably put into rotation just for a publicity purpose like this.

edit: spelling

Re: What Pandora Pays Top Artists

#39

Post by earbitscom »

w1ntermute wrote: post #12
anonymoushn wrote: post #10

Earlier quoted context omitted.

Pandora is a music discovery tool that is not based on popularity. That is, if you tell Pandora you like a certain type of music, Pandora is about as likely to play similar obscure music as it is to play similar popular music. Other similar services such as Spotify or Last.fm base their music suggestions on the person song graph rather than on the attributes of the music, so they will primarily suggest very popular m…

Right, I get what the differences in the models are between Pandora and other services. I'm referring to how the artists and/or the music itself differs that causes them to fit into this strange category.

The number of artists in Pandora's catalog is very small relative to all other mainstream services (because of the cost burden of onboarding artists into the Music Genome Project, a manual process). So, put an unknown artist that sounds like Coldplay into rotation and every user who starts a Coldplay channel is going to get them a bunch of times. Do an unknown band that sounds like Guns N Roses, same thing.

Re: What Pandora Pays Top Artists

#40

Post by jamesaguilar »

jimmar wrote: post #19
imtyler wrote: post #13

This is probably going to end up being a controversial opinion, but I just don't think music is worth that much anymore (fiscally speaking). Sure, there was a time when being popular meant signing a contract-- it was the only way to distribute your music on a large scale. Radio and physical copies were the only way to hear music, period. But these days with the internet and the right software practically anyone can c…

Give me all of the top music software in the world and I won't be able to create anything worth listening to. Your statement is kind of like saying since word processing software and electronic distribution are widely available, books really aren't worth the price tag. It's the creativity and hard work that goes into books and music that makes it worth the price--not the cost of the distribution medium.

There are two definitions of worth or value that people conflate every time a discussion like this comes up. One is "produces happiness or utility." Another is, "marginal cost to create absent government regulation." It would be easier if people would just stop using the word "value" when making either claim, but that'll never happen. So you basically have to ask what people mean each time they say something.

For me, it's obvious that songs have people-enjoy-it-value. It's simultaneously obvious that it has no marginal-cost-to-produce-value. To the extent I believe that music will become more rare if it pays less well, then, I should support some manner of government regulation to protect the industry that produces it. (And, of course, there's the unstated assumption that people will generally not pay when they don't have to, which is also open to debate both on theoretical and empirical terms. And a bunch of other unstated moral assumptions that I'm not going to go into.)

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