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Pandora Paid Over $1,300 for 1 Million Plays

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Re: Pandora Paid Over $1,300 for 1 Million Plays

#151

Post by tsotha »

hohead wrote: post #77
jcampbell1 wrote: post #27

This makes sense. Another way to back into the figure: Pandora spent $82M on content according to the most recent 10Q, with 4.18B listener hours. That implies a cost of $0.02 cents per listener hour. A million plays is roughly 62500 listener hours, which implies a content cost of $1250.

Interesting analysis. Based on their cost of $0.02 cents per listener hour, I wanted to calculate how many hours per day my $36 yearly payment equates to (ignoring their operational costs): ($36 / $0.02) = 1800 hours per year 1800 hours per year = 4.93 hours per day

I don't see much value in an analysis that ignores operational costs.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#152

Post by k-mcgrady »

badclient wrote: post #120
route66 wrote: post #107

Earlier quoted context omitted.

Disproportionate would be more than 100%. As you said: the consumers are willing to pay a certain amount. A share of that amount can never be "disproportionate". Are you demanding the same humbleness of yourself when you negotiate your salary?

It is disproportionate given Pandora, after all is said and done, is yet to turn a profit. If Pandora was making millions or billions in income, its easier to argue they ought to pay a larger share to the musicians.

No one's arguing they should pay a larger share - just that they shouldn't pay less than they are currently paying.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#153

Post by bjelkeman-again »

dtf wrote: post #144
thijsc wrote: post #73

Earlier quoted context omitted.

Spotify is owned partially by the music industry: http://www.guardian.co.uk/music/musicblog/2009/aug/17/major-... I'm sure the labels are very happy to keep making the same margins they used to with these new distribution channels. The music industry is doing fine here, it's just the artists who are getting a small piece of the pie.

Maybe this is the crux of the issue. The labels would like to shut down the competition and control the channel as did before. It would explain the PR blitz.

Indeed. Pay to play, every singe time things are played they want you to pay, and be in control. What is missing often from these discussions is that a lot of bands and musicians could deal direct with a service like Spotify. But that would cut the record companies out of the loop and hey are fighting this tooth and claw. So they essentially have a cartel controlling Spotify and making sure the pressure is on for the rest of the industry. It will be interesting to see them end up in the middle, making millions as they have manoeuvred themselves into controlling something hat could hav been an efficient market with few middlemen.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#154

Post by tsotha »

gohrt wrote: post #100
jcampbell1 wrote: post #65

Earlier quoted context omitted.

You can't do that with public financial statements. When preparing financial statements, there is a process called intracompany balancing, where you pull out any revenue/expenses that were generated within the reporting entity. If that nonsense was allowed, then every company would show revenues in the billions. The finance department would pay the the HR department for HR services, the marketing department would buy…

Or they spin off sort-of-separate entities to move the profits around (Hollywood Accounting)

That only works between entities in different countries, though they can use the strategy to dodge liabilities.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#155

Post by monkeyspaw »

Glyptodon wrote: post #48
dillona wrote: post #19

Earlier quoted context omitted.

> Not that have knowledge of royalty proportionality, but it also seems unfair to have royalty costs dwarf any other business costs. Why? Their business model is to take other people's work and distribute it to subscribers. It seems to me that acquisition of the actual product should be the majority of their cost.

Excessiveness in the injection of normative notions to a market seems like a bad idea. In any case, the content is only an aspect of the value, and without the value add many services would be rather useless. If the cost of content dwarfs the use's value add, something with potential becomes something untenable. I mean without streaming, multiple platform support, browsing/searching, etc., what would Netflix be? The…

Apple's store does the same stuff and takes a 30% cut. They aren't directly comparable, but they are charging the 30% for similar services (streaming/downloading, platform support, browsing/discovery, and they add payment and distribution on top of that...)

Re: Pandora Paid Over $1,300 for 1 Million Plays

#156

Post by emmett »

aston wrote: post #49

If I told you there was an e-commerce company without a profitable year in over a decade of existence despite federally-mandated price ceilings placed on their suppliers, you'd be incredulous. If I then added that the same company was lobbying in Washington to get the price ceiling lowered, the pitchforks would be out. But then mention it's a company selling music, and people shrug, "Oh, well music should be free any…

Well, the suppliers may face a federally-mandated price ceiling, but they also have a federally-mandated monopoly on their own product (copyright).

It's not like you have a natural right to prevent people from copying your stuff - we grant that right as a society, subject to very definitive limitations.

The real issue here is piracy -- if Pandora didn't have to compete with free, they could raise their prices and this whole issue would go away. As long as piracy exists, the price of music will be driven down. You can't blame Pandora for that.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#157

Post by smsm42 »

tveita wrote: post #29
Afforess wrote: post #5

Its easy to complain about the low pandora royalties, but these artists are essentially trying to kill the golden goose. Pandora currently spends > 50% of revenue on royalties. Any increases would almost certainly lead to the end of the company. $0 is a lot less than $1,300 for 1 million plays.

Relevant opinion: http://www.usatoday.com/story/opinion/2013/06/23/pink-floyd-... > "We've heard Pandora complain it pays too much in royalties to make a profit. (Of course, we also watched Pandora raise $235 million in its IPO and double its listeners in the last two years.) But a business that exists to deliver music can't really complain that its biggest cost is music." Sounds reasonable enough to me. Do they have…

This is a set of non sequiturs. First, raising money in IPO doesn't mean business is profitable or even viable - it only means whoever bought the stock think it could be in the future. They may be very well mistaken, especially if conditions change - such as royalties are increased or another regulatory or technological change happens. Increasing listeners also doesn't make it more profitable if they spend a lot of money on royalties - if they pay in royalties and associated costs more than additional listener brings in, more listeners means worse situation, not better. For Pandora's sake we'd hope it is not so, but the increase alone does not contradict Pandora's claim that royalties are too much to make a profit.

Also, Pandora does not complain that their largest expense is music, it complains it is so large that it prevents the possibility of them being profitable. It may be true or untrue, but the opinion in USA Today distorts it. Pandora doesn't claim it doesn't want to pay it all, it just wants to pay so that they still could be profitable.

Additionally, even if Pandora did make enough money per listener, the fact they spend a large portion of their revenue on royalties indicates that if this portion increases, their profit margins will vanish very easily. This is not contradicted neither by size of their IPO nor by number of their listeners, because this is a marginal game, not summary. So their argument is "if royalties increase, we die". The opinion you quote does not refute this. Of course, you could say "ok, so Pandora dies, who cares, good riddance, they should have built their business better" - but that'd be completely different argument. And on this argument one should notice that in this case the authors probably would get $0 royalties for internet performances if no viable business would be possible for it.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#158

Post by aston »

emmett wrote: post #156
aston wrote: post #49

If I told you there was an e-commerce company without a profitable year in over a decade of existence despite federally-mandated price ceilings placed on their suppliers, you'd be incredulous. If I then added that the same company was lobbying in Washington to get the price ceiling lowered, the pitchforks would be out. But then mention it's a company selling music, and people shrug, "Oh, well music should be free any…

Well, the suppliers may face a federally-mandated price ceiling, but they also have a federally-mandated monopoly on their own product (copyright). It's not like you have a natural right to prevent people from copying your stuff - we grant that right as a society, subject to very definitive limitations. The real issue here is piracy -- if Pandora didn't have to compete with free, they could raise their prices and thi…

The copyright here is essentially nullified by the compulsory licensing. Without congress, Pandora would have to negotiate directly with the labels (see Spotify's much higher payouts and upfront licensing fees), and with congress, the labels can't even take their music away from Pandora if they don't like the price.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#159

Post by gburt »

205guy wrote: post #96
ThomPete wrote: post #67

Earlier quoted context omitted.

The ability to make a living is not a right, it's an opportunity. The same opportunity that made it possible for artists to record once and resell in the millions is now working against them. Where where they when the distribution companies who used to make a living from the music industry was laid off? Or the record stores? It's not a right, it's an opportunity.

My point was we're trying to judge the merit of an entire system by one tiny facet. What's a fair amount of money for this guy to get if it's not X? What if I was a QA tester and I complained on my blog that my dev team was unfairly closing the bugs I open as invalid, thus depriving me of my bug-based bonus? Seems crummy, but maybe that just how the industry goes and I'm still living comfortably. Obviously, there is…

"Average work with average talent" should NOT equal average wage because people should be self-selecting in to things they are above average at as a profession. As a society, we don't want a bunch of mediocre musicians, we want only good ones.

This sort of explains why many areas are winner takes all or extremely exponential in wage/quality.

Re: Pandora Paid Over $1,300 for 1 Million Plays

#160

Post by mikeash »

whiddershins wrote: post #130
mikeash wrote: post #114

Earlier quoted context omitted.

If wishes were horses, we'd all be eating steak. Talking about "if" something that is true weren't doesn't seem very useful to me here. Illegal music sharing is reality and shows no signs of stopping, or being stopped.

I used to believe that, but now I am not as sure. I'm not sure most average people use bit torrent anymore. And the web is an extremely inconvenient way to try to access illegal content.

Hit up grooveshark.com and go to town. It has never been easier.
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