
Pink Floyd: Pandora's Internet radio royalty ripoff - scholia
http://www.usatoday.com/story/opinion/2013/06/23/pink-floyd-royalties-pandora-column/2447445/
======
tptacek
David Lowery made this point in a much more compelling and complete way:

[https://news.ycombinator.com/item?id=3850935](https://news.ycombinator.com/item?id=3850935)

Of course, ultimately, people are (rationally) compelled by the own immediate
interests. That's what allows people to deride musicians for trying to "cling
to obsolete business models", as if a verdict on the viability of someone's
business model entitled people to ignore their rights. So I don't expect Roger
Waters and David Gilmour to have much more luck pressing this argument than
any other musician has had.

~~~
Justsignedup
However, note the context here:

You are reading about the thoughts of a musician long past their prime. They
have created vast wealth at one point in time, and now they only have the
records to really keep them going.

Vast availability of music DOES NOT MAKE MONEY FOR ARTISTS unless the labels
are 100% cut out. Even then the numbers are small. They won't make minimum
wage.

HOWEVER... vast availability of music WILL increase their concert attendance.
Which means -- $ for the musicians.

This is why old timer musicians from an age where record sales were the way to
make $$ will be against the new order of things. Pink floyd is not currently
in the business of selling out madison square garden every night of their
visit to new york.

NOW I do not necessarily know which way is the better way. In fact I prefer
freely available music online and concerts. However I am not in a position to
make the call :P

~~~
tptacek
Pink Floyd makes galactic sums of money from concert appearances. The average
Merge Records artist does not. Lowery addresses this in his post.

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noonespecial
Two things to always remember about this debate.

1) Pandora's biggest cost by ridiculously far is royalty payments.

2) Pandora is not now and has never been profitable.

Lots of stuff is broken to make this so, but it's not a case of big bad
"piratey" Pandora ripping off poor defenseless artists and laughing all the
way to the bank.

~~~
genwin
It's easy to not be profitable, though. Just pay large-enough salaries or
invest in future growth what otherwise would've been profit.

~~~
noonespecial
In 2011, Pandora paid over 50% of revenues in performance royalties. 50%. Of
_Revenues_.

~~~
genwin
That's a much more telling stat.

~~~
embolism
Not really - it just means they aren't very efficient at monetizing music. Why
should artists subsidize a channel that devalues their art?

~~~
genwin
They shouldn't of course. The point being made was that Pandora isn't laughing
all the way to the bank.

~~~
embolism
That's true. The basic problem does seem to be that people love music enough
to have paid a reasonable amount for it in the past, but now have been
conditioned to believe that it is cheaper than it really is.

------
abalone
Short on facts. What's this "85% pay cut" line they keep repeating?
Unsupported and smacks of sensationalism.

This thread has a much better discussion of the actual numbers.
[https://news.ycombinator.com/item?id=5935183](https://news.ycombinator.com/item?id=5935183)

In short, Pandora is small right now and that's why the payout seems small.
But by paying per-listener as opposed to per-broadcast, it has the potential
to scale to higher payouts than traditional radio.

~~~
anigbrowl
But the problem in the other thread is the assumption that a radio listener
and a Pandora listener are the same. They're clearly not, because if Pandora
streamed the same thing to every listener it wouldn't have any customers.
People pay Pandora for music customized to their personal taste. From the
musician's point of view, that makes it _less_ effective than radio at
reaching new listeners.

~~~
abalone
That conclusion makes absolutely no sense. Personalized stations are WAY more
effective at targeting new listeners than radio stations that play the same
shit over and over.. especially for smaller/emerging artists.

Do you think Amazon would be more or less effective without personalized
product recommendations? Which is better for niche products, Amazon or
Walmart?

~~~
anigbrowl
Prove it.

I would _way_ rather have my product sold in Walmart. That's why Walmart
suppliers are willing to accept such thin margins. Amazon's great for
consumers. As a consumer, I like it that they have pretty much anything I
would want to buy.

As a _content creator_ , put me in Walmart _any time_ , as I will be
surrounded by a much smaller number of competing products. Being on the same
shelf as big sellers Justin Bieber and Skrillex is a _dream_ scenario for an
emerging artist. My needs as a producer are way different from my needs as a
consumer.

~~~
abalone
Um, you completely missed the point. Most niche products will never make it
into Walmart. Just like most bands don't get much radio airplay. Those systems
are optimized for pumping out a large volume of a limited selection. You see
that, and can fantasize about being in that "top 100", but you're not
following your logic to its conclusion with respect to the rest of musicians.

What's interesting is that even for the top 100 the Pandora model has the
potential to scale to higher royalties than the radio model, which pays the
same whether 1 or 1 million people listen to a broadcast. Less popular bands
find niche audiences, more popular ones get paid for every single listen.

~~~
scholia
This is true. I found new artists from Pandora (my Orbit station) that
mainstream radio stations have never heard of and certainly wouldn't play.

In other words, radio is focused around the head (big hits in any genre) while
Pandora reaches the "long tail".

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salimmadjd
OT: Give credit to Pandora to provide the fodder for Roger Waters, David
Gilmour and Nick Mason to finally agree on something :)

~~~
RexRollman
LOL, I was just thinking the same thing. Considering what broke them up, it
wouldn't be surprising if Waters composed the whole thing.

~~~
sinnerswing
"Welcome Pandora, welcome to the machine. What did you dream? It's alright we
told you what to dream. So welcome to the machine."

~~~
SimHacker
"It came as a heavy blow, but we sorted the matter out."

------
DannoHung
It's a pretty touch choice for artists, I bet: Make nothing or make next to
nothing.

The old days aren't coming back. Your unloyal customers will steal your
product if you don't sell it cheaply enough for their liking.

Subsequently, you either have the choice of trying to make money on your loyal
customers only or changing your product. You could try stopping your unloyal
customers from stealing from you from some means, but that has not been an
avenue that has a high return since it tends to also involve treating your
loyal customers like unloyal customers.

~~~
rdouble
Except artists make more now than they ever have...

~~~
lawnchair_larry
Could not be more wrong

------
ChuckMcM
I don't think Pink Floyd has much to worry about:

    
    
       NYSE:P Q2 (Apr '13)	2013
       Net profit margin	-22.78%	-8.93%
       Operating margin	-22.67%	-8.83%
       EBITD margin	-	-7.16%
       Return on average assets	-53.46%	-19.23%
       Return on average equity	-127.11%	-37.49%
       Employees	740	
    

Their royalty checks will stop shortly after Pandora ceases operations :-)

~~~
forrestthewoods
Streaming services like Pandora and Spotify are simultaneously destroying the
existing industry, not paying artists, losing money hand over fist, and
tricking consumers into thinking they are actually supporting content
creators. It's lose/lose/lose and the worst scenario across the board.

I thing Spotify is far, far worse than piracy because with piracy at least
people know the artists aren't making in money. People somehow believe that
listening to a couple of brief ads per hour, or paying a whopping $10 a month,
is enough to receive unlimited access to all music ever created. What a
disaster.

~~~
guelo
You forgot several big wins: music lovers enjoying music in an easy to use
service they love. And thousands of unknown/unsigned artists getting
discovered and kicking off their careers.

~~~
forrestthewoods
Like I said, people have actually been tricked into thinking Spotify is a good
thing for the industry.

~~~
smsm42
Industry seems to be doing pretty good. But why should I even care about "the
industry"? I can get why should I care about the artists, but "the industry"
is just the means to the goal of getting music, if there would be some other
means that gets the same result - who cares if "the industry" disappears?

~~~
anigbrowl
The industry also provides marketing, administrative, and editorial services
that are extremely valuable. Artists aren't necessarily good at self-
promotion, accountancy, sound engineering etc. etc. Bands usually have
managers because they're good at making music, not tour management and so on.

------
Glyptodon
I'll start believing in royalties when I start thinking it makes sense to pay
an engineer for every car that crosses a bridge he designed for his life + 20
years or to pay the architect 10 cents every time I open my front door.

Pink Floyd can sob 'till the cows come home, but it's not going to make me
believe that <del>he's</del> _they 're_ entitled to money for something
<del>he's</del> _they 've_ already done.

~~~
davmre
Engineers and architects are paid up-front for their services. Musicians
aren't. Do you have a suggestion for how they could be?

It's true that musicians _sort of_ used to be paid up-front, in the
traditional label model where a record company gave a musician a big advance
to make an album, and then pocketed most of the actual profits from the sales
of that the album (akin to hiring an engineer to build a bridge, then
collecting tolls on that bridge). But that's no longer the model for most up-
and-coming independent artists, and in any case, that just shifts the royalty-
collecting burden to the record companies, who still need to be able to recoup
their initial advances.

Another approach, which works well for bridge-building, is that the government
just pays some engineers to build a bridge, then lets everyone use the bridge
for free. This is like the _really_ old school practice in which a wealthy
prince commissions Beethoven to write a string quartet, and once complete that
string quartet is then freely available for anyone to perform. As a model for
music in the modern world, this would mean socializing the music production
business, i.e., taxing everyone the price of a Spotify subscription and
pumping that money into NEA grants for artists to record new music, which
would then be free for everyone. On the bright side, this would eliminate all
worries about piracy and chilling effects from anti-piracy enforcement. But
there are also lots of drawbacks, e.g., in this model the decision as to what
music should exist would be made, not by the market (as in the indie model),
or a profit-oriented record company (as in the label model), but by government
bureaucrats whose incentives come from the political process. Of course this
could have some good effects (maybe they'd fund fewer Justin Biebers) but IMHO
there are serious problems with a system in which an artist's viabilaity is
contingent on their staying in the good graces of the government.

Also, just so you know, Pink Floyd is a band, not a person.

~~~
randomdata
A Kickstarter-like model seems like it should work quite well for music. When
enough funding is earned, the album can be released to the public. Providing
only some teasers or something along those lines to fuel interest in the
meantime. It is pretty hard to pirate content that is not available to anyone,
and once you feel you've made enough money to release it, it doesn't matter
much much "piracy" happens beyond that point – you've already been paid.

------
jaryd
Not really relevant to the current topic of Pandora's relationship to music,
but for those interested in the historical problem with music (and the music
industry), I strongly recommend reading "The Problem With Music" by Steve
Albini (From The Baffler, No. 5, 1993)[1]. This was my first introduction to
The Baffler, and led me to start reading their publications regularly. I don't
always agree with the author's point of view, but almost always find the
content stimulating.

[1]: [http://www.petdance.com/actionpark/albini/the-problem-
with-m...](http://www.petdance.com/actionpark/albini/the-problem-with-
music.html)

~~~
anigbrowl
That's _20 years_ out of date, though. I am tired of hearing free music
advocates basing their arguments on how bad things were in the music industry
_a generation ago_.

------
MichaelGG
Further cementing my opinion that you should never find out about people you
really like (authors, musicians, etc.) as you're bound to be disappointed.

Pink Floyd may have a point. But by conflating profit and revenue they lose
credibility in their arguments. Why resort to lame rhetoric? Pandora can be
growing as a business and still losing money. The fact they had an IPO and got
more users doesn't change the fact that they are (as of last quarter) still
losing plenty of money.

~~~
k-mcgrady
I think their point was that that's not the musicians fault. If you want to
make a business distributing a product you need to find a way to pay for that
product and then sell it at a higher price. You don't start the business and
then try to force a pay cut on the producer just so you can make a profit
easier. Pandora should focus on getting consumers to pay more (higher
subscriptions, more effective advertising which they can charge more for
etc.).

Edit:

It's obvious that the music industry has business model problems but in this
case it's Pandora that has the business model problem. The industry doesn't
need to lower it's prices - Pandora needs to figure out a way to pay them as
they need the music more than the music industry needs them.

~~~
themckman
It's kind of interesting that if the supplier of the good pandora was pushing
was anything but an artist or musician, we'd be totally on their side for
trying to get a fair price the goods they're providing. However, since the
supplier is an artist or musician, they're the bad guys for wanting a fair
price for what they produce.

------
driverdan
The government has no business getting involved with this one way or the
other. It's up to businesses to negotiate. If rights holders aren't happy with
the money they're making they shouldn't sign the contract.

If the bands aren't the rights holders then they really have no say. That's a
whole other can of worms.

My personal anecdote is that bands are making far more money from me than they
did before. I'm discovering bands I wouldn't have know about otherwise. That's
the catch 22. The big, well known bands will always make money whether it be
through sales or streaming. The smaller bands are much easier to discover
through streaming but may not make much money through it.

------
pavanky
Relevant discussion on reddit:
[http://www.reddit.com/r/Music/comments/1gyylv/my_song_got_pl...](http://www.reddit.com/r/Music/comments/1gyylv/my_song_got_played_on_pandora_1_million_times_and/)

The artists don't seem to understand that Pandora simply doesn't have the
scope or reach of their other revenue sources.

~~~
anigbrowl
150m users is about half the population of the US. How big of a market does
Pandora need before it offers decent terms to its suppliers?

~~~
pavanky
But the users are listening to their own songs.

------
nextw33k
What we are seeing here is an argument about value for money. The consumers
are not willing to pay more for the end produce so what is left is the
creators and distributors arguing over their share.

The truth is that music is not a valuable commodity because so many people can
produce good music. Being a musician is a blue-collar job, a technician (for
the moment) is a white collar job.

------
scholia
As Dave Birch pointed out on Twitter: "Dark Side of the Moon, used to
illustrate, came out in 1973 - it should be in the public domain now"
[https://twitter.com/dgwbirch/status/349281727153319937](https://twitter.com/dgwbirch/status/349281727153319937)

------
jejones3141
Messrs. Gilmour, Waters, and Mason say "Artists would gladly work with Pandora
to end AM/FM's radio exemption from paying any musician royalties – a loophole
that hurts artists and digital radio alike", but if there's any evidence of
their having done so, I've not heard of it.

------
bborud
I would have liked to see more numbers.

How much does Pandora charge? How much do they pay in royalties? How much do
artists make from radio royalties? How much did artists make in royalties from
CD sales? How much have CD sales declined for Pink Floyd?

------
digz
Since Roger Waters revealed himself to be an anti-semite, I can no longer take
anything he says seriously.

