Why Pandora is self-interested

If someone loudly claims that they're looking out for your interests, there's a good chance that they're actually looking out for their own interests.

Remember when poor Pandora was about to die because of the terrible machinations of evil corporate radio? Back in 2008, many people (including myself) wrote to Congress after Pandora issued a call to action:

September 26, 2008
CONGRESSIONAL EMERGENCY!!!

Listeners we need your help... NOW!

After a yearlong negotiation, Pandora, artists and record companies are finally optimistic about reaching an agreement on royalties that would save Pandora and Internet radio. But just as we've gotten close, large traditional broadcast radio companies have launched a covert lobbying campaign to sabotage our progress.

Yesterday, Congressman Jay Inslee, and several co-sponsors, introduced legislation to give us the extra time we need but the National Association of Broadcasters (NAB), which represents radio broadcasters such as Clear Channel, has begun intensively pressuring lawmakers to kill the bill. We have just a day or two to keep this from collapsing.

This is a blatant attempt by large radio companies to suffocate the webcasting industry that is just beginning to offer an alternative to their monopoly of the airwaves.

Frankly, I never did bother to find out if the bill passed both Houses, but Pandora has not collapsed so I guess everything worked out OK.

Except that there are now new allegations of evil company machinations - and this time Pandora is being cast in the black hat. The surviving members of Pink Floyd wrote an editorial:

Great music can inspire deep emotions, and businesses have long sought to harness this power in order to make money. Nothing wrong with that – everyone deserves to make a living – but too often it leads to less than scrupulous behavior. The latest example is how Pandora is pushing for a special law in Congress to slash musicians' royalties – and the tactics they are using to trick artists into supporting this unfair cut in pay....

Last year, we joined over 130 other bands and artists to oppose Pandora's campaign to cut the royalties paid for digital radio spins. Widespread artist opposition stopped them last year, so this year Pandora is trying to enlist artists support for their next attempt at passing this unfair legislation.

Musicians around the country are getting emails from Pandora – even directly from the company's charismatic founder Tim Westergren – asking them to "be part of a conversation" about the music business and sign a simple "letter of support" for Internet radio.

Sounds good. Who wouldn't want to be "part of a conversation"? Who doesn't support Internet radio? What scrooge would refuse to sign such a positive, pro-music statement?

Of course, this letter doesn't say anything about an 85% artist pay cut. That would probably turn off most musicians who might consider signing on.

And it's not just Pink Floyd that is displeased with Pandora. David Lowery (of Camper Van Beethoven and Cracker fame) has compared his royalty statements from various sources. The figures that Lowery provided for comparison include $1,522 from terrestrial AM/FM radio, $181 from Sirius XM...and less than $17 from Pandora. Lowery is not pleased:

Soon you will be hearing from Pandora how they need Congress to change the way royalties are calculated so that they can pay much much less to songwriters and performers. For you civilians webcasting rates are “compulsory” rates. They are set by the government (crazy, right?). Further since they are compulsory royalties, artists can not “opt out” of a service like Pandora even if they think Pandora doesn’t pay them enough. The majority of songwriters have their rates set by the government, too, in the form of the ASCAP and BMI rate courts–a single judge gets to decide the fate of songwriters (technically not a “compulsory” but may as well be). This is already a government mandated subsidy from songwriters and artists to Silicon Valley. Pandora wants to make it even worse. (Yet another reason the government needs to get out of the business of setting webcasting rates and let the market sort it out.)

Another artist, Blake Morgan, noted that both musicians and music companies were united against Pandora' efforts:

"You know when you've done something when music labels and artists are hand in hand agreeing on something," Morgan told HuffPost.