Can Apple win over a music industry burned by Pandora?

“Bette Midler is angry, and you won’t like Bette Midler when she’s angry. The singer lashed out at Pandora last month, after the streaming music provider paid her $114 in royalties for more than 4 million song plays,” Andre Mouton reports for Minyanville. “She’s not the first to complain; last year, members of Pink Floyd accused Pandora of ‘tricking artists,” while the Talking Heads’ David Byrne called Internet radio “unsustainable as a means of supporting creative work.'”

“The powers that be aren’t pleased either. After striking deals with the major record labels, Pandora spent 2013 undermining them by lobbying in favor of the Internet Radio Fairness Act, a bill that would have reduced streaming royalties by some 85%,” Mouton reports. “When the legislation failed, the company promised to take its case to the Copyright Royalty Board, a federal panel charged with setting royalty rates. And when ASCAP tried to negotiate a larger cut for songwriters, Pandora filed a lawsuit, kicking off off a legal spat that ended last March in a loss for ASCAP.”

“Pandora now has 250 million registered users, but few friends within the music industry,” Mouton reports. “So when Apple rolled out iTunes Radio last fall, it was a sea change. Tim Cook and Co. not only offered to pay more in performance royalties, they threw the labels a slice of advertising revenues to boot. Songwriters were offered a 10% cut from Apple — more than double what they receive from Pandora. This was in addition to less tangible benefits, like integration with the iTunes Store, independent licensing deals (not possible with Pandora), and the ability for artists to get paid directly and avoid large Performance Rights Organizations like SoundExchange. In return, Apple got exclusivity…”

Read more in the full article here.

24 Comments

  1. sorry pink floyd dudes, i bought most of your music 20 some years ago and won’t be rebuying the same music on greatest hits albums or digital formats

    1. Just be glad they aren’t “contemporizing” their music for a new generation. Sony did that to Michael Jackson’s “new” album Xscape, and…frankly, they should have left them alone. This is a major money grab. That is what the music industry really is now anyways.

    2. This isn’t about royalties for purchases, it’s royalties for streaming, just like radio stations pay.

      Apple doesn’t have to kick Pandora’s tail, Pandora’s doing a fine job of cutting its own throat. Now if Apple truly adds Beats Music and integrates it with iTunes for purchases, Pandora is dead in the water.

        1. I don’t know about that. If an artist creates an enduring piece that continues to attract new listeners decades later, why shouldn’t they continue to benefit monetarily. Fame doesn’t buy groceries. Paul Anka was paid every time the Tonight Show theme was played for decades. If streaming replaces the purchase model, then artists have a right to earn something more from it than they currently do. Streaming is NOT like radio. For the artist, radio’s value has always been a promotional vehicle, and as such artists were willing to take a minimal royalty for those plays. The listener had no control over what music they’d hear; that was controlled by a program manager at the station. If you liked a song enough to want to hear it at your pleasure, you’d buy it and reward the artist. But with streaming businesses such as Spotify, listeners can make playlists and listen to any song as much as they’d like, eliminating any need to purchase the song where the artist traditionally has received a more accepted value for their work. As more music consumers choose the streaming model, artists who are the foundation for this entertainment are getting the smallest piece of the income. I think they have a point.

          1. too much music out there for anyone to be able to afford to buy half of what they like

            if artists want to make money they need to perform live, like the old days before recorded music became popular

    3. if u subscribe to iTunes match, u can digitize your vinyl albums and add them to your iTunes library. iTunes match will then convert them to the digital versions that iTunes sells in its music store.

  2. How many of those 4 million bette midler plays were complete, and how many were stopped cause the person changed channels as soon as they heard her voice? should she get full credit for a play if the person changes stations and only listens to a few seconds of her song?

    1. Do you really think a majority of 4 million song plays for her music wound up being skipped? Plus, unless you pay for Pandora’s subscription service, you’re limited to 3 skips an hour. She only got paid $114 for 4 million song plays? That’s almost criminal.

        1. Do you really think that the brand “Pandora” is more famous than “Bette Midler”?! Please, MySpace, Orkut, Internet browsers have come and gone. Midler has endured decades.

    2. When you half eat a McDonald’s hamburger, do they get paid as you have eaten it all? Yes. That also happens when you leave a theater in the middle of the film; when you stop reading a book etc. So, Bette Midler deserves the whole payment, even if one skips the track. Anyway, I doubt 4 million Midler song plays would be skipped.

  3. Well, there’s two types of royalties: for creators (composer / lyricist of the song) and for the recording artist (person who played / sang the song). In America, broadcast radio stations (the traditional, doing this over AM or FM) only pay royalties for the creators of the song. Recording artist (or their label, if they signed away their right) gets nothing. This is the US law and it has been like that for a very long time. Terrestrial broadcasters had been able to convince the lawmakers that what they are doing is free advertising for the recording artists, promoting their recordings, which significantly affects the sales of their records and concert tickets.

    Internet radio, however, wasn’t able to convince anyone that they essentially perform identical function (promotion of recorded music). Once could argue that internet radio’s promotional value is much greater, because the listener can immediately buy the music online, which is very beneficial for impulse decisions (“Cool song! I gotta get this one!”); with terrestrial radio, by the time the user is able to discover who is the artist and what is the name of the song, it is too late, not to mention he can’t even buy it unless he quickly goes online and remembers the title.

    And yet, terrestrial radio remains shielded from the mechanical royalty payments, while streaming radio gets to pay.

    As a musician, I have always been baffled by the fact that one of the largest recorded music markets in the world (the US) doesn’t pay royalty to artists for public exhibition (i.e. radio play). This is probably why it is difficult to find high quality music in America; while you have plenty of musicians, they all cater to the lowest common denominator (i.e. try to please as many people as possible), so that they can sell as many records as they can the usual way, because they get nothing from regular radio. Luckily, regular radio is pretty much dying away (about the only people who listen are older, traditional, conservative parts of the population, which explains the popularity of conservative talk radio…). Hopefully, when streaming services end up the only remaining meaningful way to listen to music, the system of royalty payments will be properly set up so that everyone gets their rightful share. It is very much wishful thinking thouh; more than likely record labels will gobble up vast majority of those royalties, and actual recording artists will still have to be happy to just get a meaningful share form box office receipts form their concerts…

    1. This is exactly correct–Traditional broadcasters pay royalties only to songwriters—not to performers and record labels as do satellite, cable, and Internet radio services. Royalty rates for satellite broadcasters such as Sirius take into account lawmakers’ goal of maximizing the availability of a creative work and earning a reasonable income for the copyright user. Fees for webcasters such as Pandora follow the “willing buyer-willing seller” guideline. Translation: whatever price the market will bear.

      Bette Middler and the music industry haven’t been burned by Pandora, but by themselves and their extreme shortsightedness and greed.

      “Pandora won’t be getting the lower ASCAP royalty rate they were hoping for. Then again, ASCAP isn’t getting the higher rate they were seeking, either.
      The two parties were in court over the 1.85 percent performance royalty rate Pandora currently pays ASCAP. Pandora thought they should be paying 1.7 percent, which is what terrestrial radio pays… You may remember when Pandora purchased a small South Dakota radio station, hoping to get in on this lower royalty rate.
      (Just to clarify, this is about publishing, not recordings. Currently, traditional broadcast radio pays nothing for the use of recordings in the US. Pandora, on the other hand, pays a relatively substantial rate for recordings.)
      ASCAP felt Pandora should be paying higher publishing rates, and pushed to elevate existing payouts to 3 percent.”

      http://www.digitalmusicnews.com/permalink/2014/03/17/pandoraroyalty

      Bette Middler also ought to ask for a simple breakdown of the royalty division scheme once it leave Pandora’s hands.

      It really is unbelievable that Pandora is treated differently than regular radio stations.

  4. BooHooHoo 😥 Sobity Sob Sob.

    Q: When did Pandora ever rip off the music industry?
    A: NEVER.

    Q: When did the music industry try to entirely destroy Pandora?
    A: Every single day of its existence.

    Pandora is literally internet radio. It’s FREE marketing. It’s NOT a purchasing service. It’s merely a listening service. It’s how you get to LEARN about a music artist AND similar artists. It is NOT a gigantic neck to suck upon for royalties. If you don’t like that, go suck on yourself, parasites.

    This ENTIRE debacle is about the RIAA and minions wanting TOO MUCH in royalties. I entirely back Pandora for FIGHTING BACK and being entirely realistic regarding both their model AND their revenue.

    SHUT UP RIAA and minions. You’re wrong. You’re liars. You’re FOOLS not to support what Pandora does to IMPROVE your business, not denigrate it. If your businesses are failing, it has entirely NOTHING to do with Pandora and EVERYTHING to do with you living in the wrong century.

    As usual, IASSOTS from the RIAA and minions.

  5. I can see why musicians are pissed off. $114 for 4 million song plays? That’s ludicrous. Who could make money from that, other than Pandora. I love Pandora. But they’re going to end up with no content if they don’t figure out a more equitable deal.

    1. Recording artists have been ripped off atrociously since the dawn of the recording industry. So you can’t blame them for being a little sensitive like 60’s TV actors who saw their shows reaping plenty for the producers (as syndication saw these shows run and rerun to death) and there was little for them beyond the episode pay and a couple residuals. The recording industry has/had an insatiable greed to support executive lifestyle and support the deadwood on the roster. This model is dying of course.

      It really comes down to how much in the way of profits does Pandora make? If the profits are obscene then they can probably afford to be a little more generous but historically companies are loathe to share in the riches and payout for as little as they have to, not what’s fair. This is what you are always fighting.

      To Apple though this is nickels and dimes but to the artists it’s a lifeline and Apple has historically sympathized with artists. For this reason I would suspect Apple will get more cooperation from them and Pandora will suffer for it. You catch more flies with dollars than with pennies.

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