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What Pandora Pays Top Artists
- simondlr 14y agoThat seems more than I expected? Then again, don't quite know what the going for streaming revenue is.
- alexshipillo 14y agoYes, it's way more than I expected. I wonder how sustainable it is...
- earbitscom 14y agoIt's not. That's why Pandora is fighting for their life right now. They can't get big investors to keep backing them until they get the law changed. They're in very deep.
- waterlesscloud 14y agoI wonder if it's the amount that gets paid to the label, and then the artist gets a fraction of that?
- rationalbeats 14y agoNo it is sent to Soundexchange, and is split 50/50 with artist and label. It is the performance royalty. It is a different royalty than publishing royalty which is BMI/ASCAP and those monies are sent directly to the label and they decide how to dole it out. FYI terrestrial radio pay's 0% of revenue for performance royalties, Satellite Radio pays about 8% of revenue and Pandora pays around 50% This unfair system of royalty payments were set up by the RIAA mafia in the mid 90's to discourage Internet radio since it would be a direct competitor to the old guard. That is why there is current legislation introduced 4 weeks ago to bring parity to the royalty system. Why should a song that is played on FM radio pay a different set of royalties than one played on Satellite or one streamed on the Internet? I personally have received several checks from internet streaming, for some big hit songs I played on as a session musician, yet those same songs, which were played tens of millions of times on terrestrial radio, paid me NOTHING, because terrestrial radio does not pay performance royalties.
- deleted 14y ago[deleted]
- steve19 14y agoAn 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.
- alexshipillo 14y agoBased on another stat in the article, only 800 artists earn than $50k per year. That means that while that artist is only ranked 17,000 in sales on Amazon, they happen to be in the top ~500 on Pandora.
- w1ntermute 14y agoThat's a very interesting phenomenon. I wonder what the explanation is for it.
- rhizome 14y agoThat they're more popular on Pandora than Amazon.
- anonymoushn 14y agoPandora 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 music (which I will flagrantly assume is well correlated with Amazon sales rankings). Edit: Oh, I see. I assume these artists just have much better music than they have marketing. It would be interesting to know what sets them apart, though.
- w1ntermute 14y agoRight, 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.
- jonathanjaeger 14y agoA middle class living (depending on how many ways it's split) as just one source of revenue isn't a bad deal. Not to mention there's a promotional aspect to streaming on Pandora as well.
- imtyler 14y agoThis 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 create and distribute high quality professional sounding music. It's just not that difficult anymore, and I don't think it justifies such a steep price tag. Could there be such thing as a "music bubble"?
- jimmar 14y agoGive 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.
- jamesaguilar 14y agoThere 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.)
- imtyler 14y agoThere's no empirical way to measure the amount of effort or creativity that goes into something. It just seems to me like 20 dollars for a movie is more justifiable than 15 on an album, based on the _apparent_ amount of work that went towards their creation (not to mention the actual cost). In the end, I could probably make an album myself, but I couldn't create an entire movie. Why are they priced so similarly?
- guelo 14y agoThe 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&ei=pZl0ULj4M4iViAKwlwE http://www.google.com/finance?q=NYSE%3AP&fstype=ii&e...
- mayneack 14y agoFor those of us not used to reading something like this, can you explain? Is the RIAA somewhere in here: "Selling/General/Admin. Expenses, Total"?
- Sam_Odio 14y agoI 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 lost money in FY2012 and FY2011. 0. http://investor.pandora.com/phoenix.zhtml?c=227956&p=irol-irhome http://investor.pandora.com/phoenix.zhtml?c=227956&p=iro... (see Historical Financials).
- forgotusername 14y agoA 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
- rayiner 14y ago> That means royalties make up a whopping 60% of all revenue. Is that surprising? I'd imagine inventory makes up more than that of Amazon's revenue. Both are in the business of selling stuff made by other people. They help you find what you want, sure, but they're distributors.
- RenierZA 14y ago
- pasbesoin 14y agoPandora: Is there a reason the image on this blog post is so large? This one image, resized in the browser to 300x200, is consuming 2+ MB. Namely, this one: <img alt="tim-map.jpg" src="http://blog.pandora.com/pandora/tim-map.jpg" width="300" height="200" class="mt-image-right" style="float: right; margin: 0 0 20px 20px;" /> I've been noticing the resurgence of browser-based resizing of large images on a few different business blogs/formats, recently. In this case (and some others), the resize is to much less than 1/4 the original, so I'm thinking it's not a "Retina" thing. Maybe it's just convenience for the company/blogger, not bothering to resize. But then, every access is a 2+ MB hit -- which is how I noticed it -- both for you, and for the viewer, which may particularly impact mobile viewers and others on limited bandwidth connections.
- pkulak 14y agoThey are probably just not familiar with bandwidth costs... wait...
- rm999 14y agoProbably an oversight. I usually surf on 30+ mbps connections, so if I were testing a site I wouldn't notice it.
- bo1024 14y agoIt's a bit different when your job is to make a website.
- hnriot 14y agoBut blogs are often run by marketing interns who usually don't care or know any better any bandwidth.
- elliottcarlson 14y agoOr marketing executives with the same lack of concern.
- 14y ago
- dorkrawk 14y agoI wonder what % of each artist's total income these Pandora numbers represent. Is Pandora (or any other streaming service) a sustaining financial source for many of these artists when compared to music sales, touring, licencing, etc. or is it just a drop in the bucket?
- earbitscom 14y agoThe primary factors in this are how much they get played, whether they're on a label, and how many people are in their band. The performance royalty is based on number of streams, split 50% to the label, then 50% cut between all performers on the recording. A 10-piece band of percussionists, on a label, getting played in new age isn't going to make much.
- dkrich 14y agoI 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, quite frankly, has P&G by the balls. Yet Wal-Mart is the source of more revenue for P&G than any other distributor, so they earn the right. Now I realize that Pandora is the exact opposite- the distributor has no leverage, but I believe the same principle applies. There is absolutely no reason that distributors should be treated equally. Competition varies widely across different distribution channels. If Pandora can't operate at a profit, I don't believe it is incumbent on the artists to make way for their sustainability.
- thasmin 14y agoThe difference is that your example is in a free market and music royalty rates are controlled by Congress.
- rprasad 14y agoThe royalty rates are controlled by Congress precisely to allow for services like Pandora to exist until the internet music market can reach bargaining parity on par with other music markets (i.e., radio, etc.) Without those rate limits, the RIAA would charge many multiples of the current royalty rates.
- rayiner 14y agoMusic royalty rates are not set by Congress. The Copyright Royalty Board sets rates for compulsory licensing. These are licenses copyright holders have to agree to for certain uses. Nothing stops Pandora from negotiating regular licenses with content producers. Pandora doesn't do it because they'd get a worse deal that way.
- earbitscom 14y agoWhat 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.
- sopooneo 14y agoIf they wanted, could Pandora avoid interacting with record companies completely? That is, only buy music direct from artists? And if they did this, could they then just negotiate whatever deals they wanted with the artists? I am not implying that this would be economically feasible for them, just curious if there is any reason it absolutely couldn't be done
- derekp7 14y agoThe problem is that most artists that the majority of people want to listen to have already signed exclusive contracts with one of the record labels. And they did that because of the initial value of promotion by the record label (it's almost impossible to get radio airplay without a record label).
- burrokeet 14y agoThey signed with a label because of the advance first and foremost.
- fakeer 14y agoI doubt the font size of Pandora blog is to save space. Whatever. It's a pain the eyes anyway.
- donebizkit 14y agoKudos to Tim Westergren for sticking to the fight after all these years. Good luck Pandora.
- RobotCaleb 14y agoI dislike Pandora and much prefer Grooveshark. I'd like to see Grooveshark make a similar post, but I have a feeling it'd leave me sad.
- brianbreslin 14y agoI always thought grooveshark was 1 step away from being sued into oblivion. Aren't they not paying royalties? I thought their excuse was the music content was uploaded by users.
- citricsquid 14y ago> but I have a feeling it'd leave me sad. it'd leave you seriously sad, if you have any morals. Grooveshark do not pay royalties on most of their streams, it's really pretty shameful. They abuse the hell out of the DMCA.
- rthomas6 14y agoWhat about Spotify? Spotify seems like a better Grooveshark, to me.
- RobotCaleb 14y agoLast I checked Spotify required a Facebook login. I deleted my account a couple of years ago.
- lylemckeany 14y agoWith stories like this and the recent Rdio announcement (http://www.engadget.com/2012/10/02/rdio-artist-commission/ http://www.engadget.com/2012/10/02/rdio-artist-commission/), I kind of wish I was still a professional musician.
- kahawe 14y agoGreat... "We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S." I long for the day when these prehistoric business and licensing models are finally burned to the ground and I can just spend my hard-earned money on music and motion-pictures without having to worry which country I am in and which country the song or movie is from.
- tehwebguy 14y agoVery interesting, but the way they contrast French Montana and Drake / Wayne is a little misleading. French is blowing up right now because of "Pop That", current #2 hip-hop single that features Rick Ross, Drake and Wayne. Not trying to put French or Pandora down, but his JV deal with Maybach Music Group and the six figures that it usually costs to get the current top 2 rappers on his track probably have more to do with those royalties than Pandora right now.