British rock group, Pink Floyd, is livid with digital music provider Pandora. The three remaining members of Pink Floyd are accusing Pandora CEO, Time Westergern of, “tricking artists into signing a confusing petition without explaining what they are really being asked to support”, and with some good evidence to back it up. To begin to grasp the ongoing discord in the internet radio world today it is important to look back at what is being proposed.
In October of 2012, major news organizations publicized that the Pandora CEO was the lead backer behind US Bill H.R. 6480/S. 3609,otherwise known as the Internet Radio Fairness Act (IRFA).
The IRFA, as designed, would lead to a drastic change in how royalties are decided; mainly reducing them. Most streaming websites have approached the need for revenue by asking users to purchase memberships. An example being Spotify, which charges ten dollars a month for a subscription free of advertisements amongst other benefits. Pandora has not used this method to the same extent, as much of their revenue comes from the ads people have to endure while listening. The IRFA would inhibit music rights owners from negotiating their own royalty fees. To put a face to this struggle would be that of Jay-Z, who recently purchased all the rights to his own music. Under the IRFA even Hov would not able to negotiate royalty percentages with the corporations that stream his music via the internet.
Pandora, for a long time, has struggled in turning a profit, causing Westergern to plead with Congress that they allow the reorganization of how royalties are distributed for digital radio services. This will, in result, allow Pandora to greatly decrease the percentage of royalties they are required to pay.
In all fairness, this is a direct result of Congress giving established companies a leg up over the more progressive and digital sites. Because there is no previous dialogue between sellers and buyers, judges have set digital royalties at a very high rate. Fifty percent of profits from internet radio stations are required to pay royalties. Ten percent for satellite radio stations, and traditional AM/FM pays zip, nada, nothing in royalties.
This entire situation may seem familiar, because it is. A theme in the US economy that was reiterated by the 99 percent movement and occupations we saw over much of the country last year. No matter your political views, this is a tangible example of the rich getting richer, and poor getting poorer. Only, in a facet that might prove easier to understand. At this point in the year, just over half way through, Pandora has netted seventy million dollars from advertisement profits, and thirty million from membership dues. Under the current structure, Pandora will pay fifty million in royalties. Distributed amongst artists based off of music play and popularity. With the proposed IRFA, Pandora would be required to pay 10 million in royalty fees. It doesn’t take a math major to understand the significance of this swing. An artist receiving ten thousand dollars a year in dues from Pandora currently, would then, according to Pink floyd, only make fifteen hundred after the Act passes.
To get really legal on you, I’ll explain briefly how these judges work, and yes they are real life judges, with absolutely no background in music. Every five years there is a trial-like process held in the Library of Congress, identified as the Copyright Royalty Board. Musicians and artists are represented by a company called SoundExchange, similar to a union, except non-profit. Then, there are digital radio stations (Pandora), satellite radio stations (Sirius), and finally cable companies (Comcast, etc.). Each provides witnesses to explain the state of music, manufacturing processes, and overall cost of operation from each perspective. Then these three judges deliberate, and set the pertinent royalty fees as they see fit for each division.
Around this time last year, over one hundred and thirty musicians and bands came together to sign a petition disbanding Pandora’s hopes of lowering internet radio royalty fees. This year, Pandora attempted to have artists support their cause.
Pink Floyd is outraged because of the lack of transparency by the companies CEO and founder. The members, as well as many other artists, were asked by Pandora to sign a “letter of support” for Internet radio. The letter asked artists to “join the conversation” but never mentioned the impending royalty cut should Westergern’s bill pass through congress. Pink Floyd’s stance, is that Westergern would use these signatures to persuade Congress that artists are supporting the movement to pass the IRFA. It is this proposed deceit causing Waters, Gilmour, and Mason, of Pink Floyd, to stand up for all the artists who in essence, have no voice in how their music generates revenue via radio and cable stations. This “whistle blowing” if you will is based strictly on, “a matter of principal”, according to the living legends.
I cannot possibly discuss all the different angles from the dozens of perspectives without writing a novella and boring you to bieber, I mean death! But here is some food for thought. Is it fair to cut another source of income for these artists? Is it fair that internet radio stations such as Pandora pay a royalty fee 5 times that of Sirius XM? Should satellite and traditional radio stations be forced to up their royalty percentages? Does the government need to stay out of it entirely and allow an open dialogue, thus an open market? How will this impact music releases in the future should it pass? And will you continue to support Pandora?
One thing to be incredibly proud of, is that the producers and artists we enjoy so much today, have been at the forefront of the music industry. Many have released their own productions for free, created their own labels, and have given a figurative middle finger to mainstream music companies by building artist followings from the ground up, different from corporate produced “supergroup’s”. Many of these producers have been behind the pop artists that flooded radio stations for decades. They have scored movies and television shows. And within our community, they are recognized for so much more.
Pink Floyd Editorial on USA Today– June 23, 2013
Electronic Frontier Foundation– October 31, 2012
The Register– Andrew Orlowski-October 17, 2012
Mason, Waters, and Glimour. “Pink Floyd: Pandora’s Internet Radio Royalty Ripoff.”USA Today. Gannett, 25 June 2013. Web. 27 June 2013.
McAllister, Neil. “Pink Floyd Blasts Pandora for ‘tricking’ Artists with Petition • The Register.” Pink Floyd Blasts Pandora for ‘tricking’ Artists with Petition • The Register. The Register, 25 June 2013. Web. 27 June 2013.
Orlowski, Andrew. “Pandora Boss Urges 85% Pay Cut for Musicians • The Register.”Pandora Boss Urges 85% Pay Cut for Musicians • The Register. The Register, 17 Oct. 2012. Web. 27 June 2013.