Pandora: We’re Paying Several Artists More Than $2 Million a Year

That’s according to Pandora founder Tim Westergren, who was stumping for lower royalty rates on Tuesday in San Francisco.

And part of his complicated pitch was that successful artists are making a lot of money off the Pandora platform.  “There are artists making more than $2 million from Pandora,” Westegren told attendees at SF Music Tech Summit during a morning discussion.  “And, many artists are making more than $100,000.”

“You’d be surprised at how many artists are making more than the average household income in America.  We’re talking about making a living on Pandora alone.”

Westergren estimated an ‘average household income’ at $50,000, enough the pay the bills in many cities.  But outside of those details, the underlying message is this: please don’t kill us, labels, SoundExchange and publishers, because we’re good for artists.

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So, ugh, lower rates so they can pay more?  Westergren noted that Pandora is now spending all of its resources on advertising products and advertising sales to satisfy royalty obligations, not on programs that would empower struggling artists.  “The prospect exists for Pandora to actually activate fans for bands traveling around the country trying to bring people into clubs,” Westergren told interviewer Jon Healey, an LA Times journalist.

“But the development on that kind of technology is suffocated, because we spend every last penny trying to develop yet another ad product.  And one of the invisible consequences to this kind of rate is that it stifles innovation, and a big piece of that innovation could directly impact the plight of the working artist.”

13 Responses

  1. Artists

    Drake and L’il Wayne top the list at north of 2 mil each. But you know that money will surely trickle down thru the labels to fund artist development.

    Mbwhahahahaha!

  2. Sean Beavan

    All forms of Radio – Cable, Internet, and Terrestrial, should pay the same rate. No more free ride for regular radio and no more punishing internet radio. It’s just another example of a bought and paid for Congress. Broadcast Radio is threatened by a much better model (Pandora) so it lobbies legislators to make the playing field completely uneven. I am an artist in support of Pandora. They are not seeking to cut out payments to artists, they just want it to be fair for all. There is no possible reason why all radio stations should not pay performance royalties to artists. The only reason people listen to radio is for the music (or content) pay the people who provide it just like film and television do.

    • Visitor

      The problem is that Pandora’s business model is not sustainable. They are extraordinarily efficient, have been operational for over a decade, have millions upon millions of loyal listeners/subscribers, and they are losing money every single quarter.

      So, no. Forcing other companies to follow Pandora’s lead and slowly go out of business is not a tenable solution.

      • Casey

        Pandora’s rates are what is unstainable. If Pandora paid say, 50% of their revenue, they would be profitable. 50% would actually be extremely fair for both artists and Pandora.

  3. dave

    I find this really hard to believe. He’s trying to pretend that “artists” are getting the money–let’s differentiate that from labels and get true figures for “artists”

    If they are truly 70% indie, which I doubt, show us the numbers. My guess is 70% of the tracks on their system are Indie, but the % of plays is a different story. Tim’s project started as an intellectual, music matching project and has changed into an internet radio station playing typical genre songs. I listen to a Jethro Tull station and have never heard a new artist or an independent artist, just the typical classic rock stars all financed by the labels.

    However, I find value in Pandora and especially enjoy listening to explore traditional artists, especially jazz. Most cuts are from Greatest Hits albums, however.

    • Visitor

      I couldn’t agree more.

      I doubt that any artist is getting paid that much. Thier label yes, the artist no.

      I know that the agreement between the label and artist is not Pandora’s problem. However, Westergen could at least say “rights holders.” But that wouldn’t sound so artist friendly.

      You also accurately describe the difference between Pandora and other services. Other commenters must keep this in mind when demanding that Pandora should pay less or other services should pay more.

      • Casey

        Pandora doesn’t not pay labels or artists, they pay sound exchange. Sound Exchange distributes the money and is completely out of Pandora’s and the label’s control.

        • Another Artist

          I’m a professional composer/instrumentalist. I know a number of artist making more than $50k+ from Pandora. These artist are without label support and do this entirely on their own. So, in this model, it works. Independent artists are able to make a living this way.

      • Me To

        The royalties are paid on to SoundExchange which pays the royalties on to the licensors. Typically this is split evenly between the artists and the labels.

  4. Moses Avalon

    It’s tough to see Tim’s position as “pro aritst.” He wants to level the playing filed, true, but in the wrong direction. Terrestrial radio should pay what Pandora pays. Not the reverse.
    I’m a big Pandora user and fan, but it might be time to reconsider my support. Unfortunately, there is no real alternative. Pandora is just that good

  5. paul

    Tim Westergren blogged more details on this after his talk. Here’s the full blog, and here’s an excerpt:

    “For over two thousand artists Pandora will pay over $10,000 dollars each over the next 12 months (including one of my favorites, the late jazz pianist Oscar Peterson), and for more than 800 we’ll pay over $50,000, more than the income of the average American household. For top earners like Coldplay, Adele,Wiz Khalifa, Jason Aldean and others Pandora is already paying over $1 million each. Drake and Lil Wayne are fast approaching a $3 million annual rate each.”

    /paul

    • Music Employee

      And Tim Wesserman will make more than any of those artists in that same year. Those artists are how Pandora makes it’s money. Without any of them, Pandora would not have a business.

      HE NEEDS THE ARTISTS, THE ARTISTS DO NOT NEED PANDORA!

  6. Music Employee

    I know for a fact that Tim Westergren and other execs at Pandora made well over $2mill last year, so he has no right to complain when the people who provide his entire product do well. This is nothing more than greed on his part. Music creators at least invest their money back into music.

    I don’t think $.00011 is too much to pay per stream…especially when companies like iHeart radio pay $.0002. And it’s not our fault that Pandora chooses to limit it’s ads in order to control a larger market share.

    This is all part of the devaluizing of music and intellectual property. Why should Tim make millions while the millions of people who provide his product make jack. Pandora consists of probably 100 or so employees. The music creators (artists/labels) employ 100s of thousands of people who contribute to the music we all enjoy. Shame on him for getting rich off the backs of the many people who are responsible for his product…music.