"Pandora currently pays songwriters and music publishers a smaller percentage of music royalties than any other digital music service."

Yes, but how does it compare to terrestrial radio?

Dear songwriters, pandora is not profitable. So if the rates are not lowered then this outlet won't exist. Then you're really screwed.

So for that reason Pandora should be on a royalty welfare state?  Makes no sense.

Makes perfect sense. If Pandora isn't there, the majority of streaming revenue in the US digital music business will just disappear. This isn't about morals, its about business. The reality is that Pandora can't gross enough. I always truly believed the ad supported model could not survive, and this is a perfect example as to why. Because there are only so many ads you can shove in someone's face before they stop using pandora (like me) and because Pandora is way too limited by HOW they can stream, WHAT they can stream, and WHEN they can stream it. If the restrictions of this stupid licensing scheme were removed, it would create a more profitable market based around INTERACTIVE streaming, which is not allowed without paying the labels disgusting amounts of money - another thing Pandora couldn't afford. I believe that $10/month for spotify is a deal on any level, and if millions more paid for the service than artists would make more and stop bitching. I can't help but to point out that Pandora just isn't a good business model, and that it isn't their fault - their restrictions are dictated by the labels. If only Pandora could go after the labels instead...

Believe me, we'll be just fine without Pandora.  There are plenty of other streaming services with better business models that can afford to pay the industry-standard royalty rates

Name one.  Name a legal internet radio company that has turned a consistent profit paying these rates.

Spotify...iHeart...Rhapsody...etc...just to name three for a start.

Think you might need to look up the definition of 'profit,' bud. 

http://mashable.com/2012/10/05/spotify-revenues/

I happen to know the ledgers for those companies..regardless of what you think you are reading in the press...bud

Spotify is hardly paying industry standard rates.  They're paying the rates they negotiated a few years back, which are minimal, and now they're complaining about the agreement that they pushed for.

Suggest you do your homework.

The fact that Pandora has a crap business model which doesn't support itself is not a good reason to take money out of the pockets of the people who are providing its content. If the company cannot afford the wares it is attempting to peddle, then it should fold.

Not giving as much money as the music provider want is taking money out of his pocket ?

That is some money they would perhaps not have earned at all !

It is not taking money at all when Pandora does not take profit !

Always wanting money, money and money for something that does not cost anything to be heard !

Pandora helped me discover new groups, that I would not have discovered by myself, and I have bought albums fros these groups, this is the goal of Pandora !

Spotify turns a profit, therefore there are business models that work. In other industries if a company cannot afford to pay for the materials they need to build the product they want to sell, guess what. They are not in business, they can't take the provider of the materials to court and force them to lower their prices.

http://mashable.com/2012/10/05/spotify-revenues/

so let's expand their business model to other media outlets. movie theaters that don't pay for the movies they show, retail stores that don't pay for the items they sell, t.v. stations that don't pay for the programs they air, computer stores that don't pay for their software, etc. after all, they are exposing the products to the general public, who then will say, "hey, this is great, now i'm gonna go out and buy this so the producer can make a profit".

like the ads on craigslist i've seen:

"restaurant needed to cater my party. no pay, but you get to promote your restaurant, hand out business cards and get exposure"

or; "i need six plumbers to come to my house and work for three hours, for tips and a meal, and hand out your business cards"

any takers?

or, as my friend, harmonicist extraordinaire says, "if i want exposure, i'll stand on top of mcdonalds with my clothes off and play my harmonica"

why is it that musicians alone are expected to rejoice when their work is given away? 

Than perhaps the market has destined them to fail and another outlet willing to pay artists a fair return will find a new business model.

but wait there's more, Pandora Bill creates mini-SOPA to Censor Musicans who resist bad royalties... wow...

http://thetrichordist.com/2012/11/08/irfa-section-5/

Bryan - you're a dope.  You clearly have not done your homework on the topic.  Dave Lowery, ASCAP (which consists of songwriters), and the others who work so hard to defend the rights of those who cannot protect themselves would be ashamed to hear someone make such an ignorant statement.

Bull, if the founders are pocketing millions, it's profitable in my book. Sure, the corporate status makes it look otherwise, but if the principles are making money, it's coming from somewhere.

Honest folks pay their suppliers before taking a salary.

Joe, you speak the truth. I'd be willing to bet the board members at Pandora aren't living in the same low rent joint I know some musicians (who are feautred on Pandora) are living in. Sure, they made their choice to be musicians and not executives - but still.

how are we screwed? i get most of my sales and royalties through itunes. i get airplay on pandora, but it has not translated to any income for me. i am ready to pull off of pandora, spotify, etc altogether, since they have had no net effect on my income, except to defer my sales from itunes, emusic, etc. as far as i'm concerned, the sooner they disappear, the better. 

Don't let Pandora lower royalties they approved 5 years ago:  http://musicfirst-coalition.rallycongress.com/7986/tell-congress-dont-slash-music-creators-pay/

Songwriters should just sell t-shirts.

Haha! 

I honestly don't know anyone that uses Pandora.  I used it for 3 weeks over 4 years ago and most likely will not return.  

It'd be awesome for someone to do a comprehensive study on how society consumes music in 2012.  Very curious to see if any of the newer streaming and music discovery services are grabbing market share. 

Triton Digital claims over 60 million people a month use Pandora. I personally only use it to try to find music that I don't know about, but I don't use it for actual listening.

Really? Nobody likes Pandora? I do. Or did, I don't live in the US anymore. I live in Sweden, where we have Spotify. Spotify is ok if you want to listen to something specific, but Pandora ruled when it came to "radio", i.e. somewhat non-predictable streams where you could find new music. Spotify's "radio" is crap. 

I liked Pandora even though they fired me for not shutting up about their growing hypocracies, such as this article is exposing. I'd still listen to it if I could. 

""To file this suit at the same time that Pandora’s founders are pocketing millions for themselves adds insult to injury."

Selling stake in the company has nothing to do with if the company itself is making millions, which it is actually losing money. Songwriters are more than welcome to buy stake in the company and then sell it again. But since the company isn't turning a profit, they probably won't get much of a return on their investment.

Sooo...

You are OK with executives and investors pocketing millions from a company that they are incapable of making profitable....

But who also hypocritically demand that creators give up their contracted earnings in order to subsidize that failed business?

is that right?

Totally!

ugly.

If Tim really cares about artists, he wouldn't sue ASCAP. Performance royalties are .08% of label royaltes!

Pandora is to Artists as Major Labels are to Artists...

Pandora and Label execs get rich, most artists end up in poverty.

I hate hypocrites.  

Sorry to bring bad news, but most artists end up in poverty regardless of what you said. Nobody promised them good income. In fact the world pretty much tells artists they will be broke unless they are extremely lucky. It is really just as bad as being a hypocrite to assume that as an artist, you will make a living. Just like in the days when art was supported by rich patrons because normal people didn't pay for music... well we've returned to those times. Make it work. Find your patron. But don't expect the companies to do the right thing. They are trying to make money and be profitable. Artists are trying to live a fulfilling life doing what they want. Those things don't exist on the same plane for 99% of the world. Remember that. If you want to make money stop making music for a living. There's really nothing wrong or strange about that idea. Just like you wouldn't try to be a janitor if you want to get rich, you don't try to become a successful musicians to get rich. Get it yet???

Ahhh the good old days. Back then you could even own another human being.

So in the good old days rich patrons would commision works. That would give composers enough money to pay musicians for rehearsals and pay for room and board for themselves while composing the commisioned work.

If you wanted to get rich, "normal people" would pay to see your music performed. Even those unwashed lower classes would stand in line and pay to see the latest opera. If the work was popular, a publisher would contract with the composer to reproduce and sell printed copies of a composer's work to other working musicians.

Anyway, I don't think the majority of musicians today are asking to get "rich." Just to make enough to pay rent, feed themselves and maybe get a little health insurance (God Bless America!).

Finally, today the most musicians make less than the average janitor and IMO a majority of musicians would be glad if they could get paid as much as a janitor.

Adam,

Why the negativity? I make a very honest living in music. In fact, if I stopped making music I'd probably make less money. Pandora is one of my many income streams. It costs me time and money to create the product that Pandora licences from me. Should I not be compensated?

From a purely economics point of view, why should I be treated any different than a janitor? He cleans the floor, get's paid. I make make music, and should get paid as well.

Are you suggesting that if I choose a profession that I enjoy, I should work at a lower salary or not be paid at all?

I've been reading this thread, and I believe people like Bryan and Adam are trolls.  That is, they post contrary views either just to make controversy or because they're actually getting paid to do so, perhaps by PR firms working for Pandora and other anti-compensation firms.

The whole argument they present is absurd.  It's like saying "well, this movie theater chain isn't doing well because they run their business poorly, so they should pay the studios less money for new releases."  See how far that will get you.

Pandora knew the rules going in.  They created a business. They screwed it up.  They'll go out of business, and their place will be filled by another company (and there are already a few out there).  Posters who are saying Pandora should get special breaks must have an alterior motive, as noted above.

End of story.

I agree.

Only an insane person would get into a business where the price of the product they sell is partly or wholly determined by an arbitration panel whose members are appointed based on which way the political wind is blowing.

and I believe someone once said that only an insane person keeps doing the same thing and expecting different results.

yes, let's go back to the days of indentured servants and sharecroppers.

the funny thing is, would you use that reasoning on any other profession? doctors, lawyers, screenwriters, software developers? yeah, great program for my smartphone. you don't really expect me to pay for it though, do you? i can just rip it for free off the internet. did you really expect that because you studied programming and worked hundreds of hours on your app, that you are entitled to make money from it?

Music is not digital road kill, it is the fuel that powers the internet.

Without music that people want to hear, Pandora would have no business, it doesn't get any simpler than that.  The sad reality is that Pandora has an unworkable business model and is using the "system" to descriminate against artists.

They haven't even tried to aggressively market a plan that would eliminate free subscriptions and create the revenue to run a profitable business and support artists at the same time.  They are taking the easy way out at the expense of others.

Music has value, and if you don't believe that, someday our rich diversity of great music will diminish and our once healthy middle class artists will disappear.  Making great music isn't a hobby, its' a job.

I think you have one of the best understandings of the situation of all the commentors here. There has been no effort put into charging for the music. I mean we all know most people will stick with free, but if you don't start somewhere, it will never go anywhere. Why spotify went back on the limit to how much free music you'd get, for example, is beyond me. I paid anyway. But I think companies should give you all the perks and the whole service free for 3 months and then start charging or lock you out. "Leave it to retailers to figure out how to screw themselves and make less money" is what people always say in my business... applies here too. If they don't try to create change, it certainly isn't going to happen on its own.

Hey, anybody know what the political party breakdown is on this legislation?  Is it bi-partisan or is it the Republicans working against the music industry again?

Aaaah..the old evil Republicans myth...

Here is the real storyof the anti-musician IRFA supporters:

(D-CA) Pete Stark

(D-CO) Jared Poli

(D-CA) Zoe Lofgren

(D-TX) Gene Green

(R-UT) Jason Schaffetz

(R-CA) Daryl Issa

(R-CO) Mike Coffman

Traditional anti-musician legislators:

(D-CA) Nancy Pelosi

(D-CA) Diane Feinstein

Traditional pro-musician legislators:

(R-UT) Oren Hatch

(D-CA) Mary Bono

(D-CA) Howard Berman

Our copyright and royalty laws are archaic. 

If a company is not profitable it will go out of business, unless investors are willign to continue putting in money to keep it afloat... which doesn't last long.

There are ways to make a nominal income from performing music.  I see it daily.  I work with it daily.  T-radio, I-radio, etc are a part of the equation --- a small part. 

If Pandora did not exist, more people would listen to terrestrial radio which pays songwriters, especially from radio stations in countries outside the USA.

Personally, if iTunes had streaming radio and compensation were based on percentage of ad revenues and subscription fees, iTunes would find the proper balance of streams to generate the most stream vs download revenues for all involved such as Apple, labels and artists. Pandora is unable to offer this optimization feature that Apple can offer.

Screw the statutory rate and negotiate based on percentage of ad revenues, at the very least.

For the pure entertainment folly of it, we'll be able to watch the House Hearings on CSPAN at the end of November as the House Subcommittee on Intellectual Property, Competition and the Internet will be holding hearings on this topic.  Dates are unconfirmed at this time, but they may be held on November 27th, 28th or 29th.  Stay tuned.

EVERYONE in the Music Industry should take an interest and not only watch, but correspond with your local Representative or Congressman about it.

You mean Representative or Senator...

Yes everyone in the muisc industry and tech industry should watch just to see if their lobbying money was well spent

Streaming and download internet payouts should be compensated no less than radio plays.  Not sure if this discriminatory practice has yet been attacked successfully in court.  Or, more importantly, are the representative organizations of songwriters and musicians lobbying Congress for such a change in the law?  I'd like to see Digital Music News write on that topic -- or if there are links to such stories, please, Editor, post them.

WAKE UP CALL...

This is very bed, if not completely unexpected news – Pandora and their ilk now trying to sue the songwriters and their publishers. Because I am a retired Federal Police Officer, besides being a songwriter, musician, composer, arranger and writer with my own small record label, I want to offer some outside the box thinking in how to respond to the Pandora, Google etc. threats. I strongly suggest that ASCAP, the major Publishers and the other PROs Lawyers get together with their counterparts at the Copyright Offices, the RIAA and other organizations that are trying to protect the Creators and pursue the following: There are Federal Prosecutors in the U.S. DOJ that are sympathetic to us Creators and don’t like what Pandora, Google, etc. are doing. Approach them and ask them to file Federal Criminal Charges against Pandora, Google, etc., for Conspiracy, Threat, Accessory and Accomplice Before and After the Fact of multiple counts of Fraud and Larceny and RICO Charges. From my perspective, I wouldn’t be surprised if Pandora, Google, etc. haven’t already provided sufficient Probable Cause for a U.S. Attorney or AUSA to seriously consider this approach. Then call a massive press conference and announce that you have asked the DOJ to file these criminal charges against Pandora, Google, etc. This not only beats the bad guys at their own game, but also makes the general public aware and encourages the DOJ to do something about it. Don’t be surprised if the Motion Picture/TV industry figures out why they should join you in this endeavor and add their own Legal Counsel to our side. That should get these copyright-infringing, Royalty stealing thief’s attention real fast.

Yet another example of creators/artists being shamefully squeezed.

Okay, so I am a professional musician and pay indie rates in NYC (1,5-2,5k per song for recording/ mixing/ mastering). I took 7 years out of my life to study composition, arranging and performance and practiced piano and voice on average 6 hours a day for about 15 years. I still take voice lessons taylored for people who pay their bills by singing and they cost on average 150$/ hr and can go up to 500$. I also took 2 years to learn how to dance and I make my own stage costumes from scratch. I do my own PR or hire someone (average cost 300$ a month, average contract length without renewal - 6 months), I need to cast and hire tour musicians and they often get paid per rehearsel.

Okay, Pandora, here's the fact: a professional musician (someone who can sing or play, who can present themselves professionally on page, who has a developed ear and who can sightread, among other things)and their families invest years and often a decade or two monetarily and time wise. And here is the question: why do you think it's unfair that after 20 years of not being paid a dime that I recieve decent royalties?

Most people who comment on this topic are obviously not professional musicians or they have no selfrespect. And yes, I think that no royalties are better than ridiculous royalties given the time and money I need to get the product to the desired level and investment needed for promotion. I need to pay rent in NYC which alone is 750$-1000$/month when living with a roommate. Obviously I carry business expenses and I also need to purchase food, clothes, insurances, musical instruments, pay for transport etc.I am better off playing in subway and selling records there. 

My ROI might be higher if I concentrate on opportunities that actually make money to cover my base. You can spare your change for your next Bentley, coke and hookers.