Pandora Is Now Charging Indies a Minimum of $1,000 for Promotion…

This is a letter from an indie label owner boxed out and frustrated by Pandora.  It details some of the costs for promotion on the Pandora platform, which can include audio, visual, banner, or other slots.  The smallest, shortest campaign starts at $1,000, which gets seriously expensive when a serious campaign is involved.

A representative for Pandora declined to confirm or deny the charges over email.

(bold from the original letter preserved)

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Dear Paul,

Nobody’s talking about the unintended consequences of the high royalty rates that these services are currently paying the major labels.

For example – when Pandora first started, they were easy to work with and you could engage with them to promote your artists. This was a boon to indie labels. Now that the majors are forcing Pandora to pay such high rates – Pandora in turn is trying to make up for it by charging artists money to be promoted through their service.

The minimum amount is $1,000.00, which is out of the range of most indie artists in a business that it is increasingly hard to make money at.

It’s a combination of audio, tile, and banner ads, positioning, etc.   It doesn’t get you much. The way they spin it is you can target by Zip Codes, Cities/Regions, Gender, Music Preference, etc., to really dig deep and get to the fans that actually might buy your music.

It’s actually kinda cool – but the problem is that more and more, people are dipping into the artist’s (and my) pocket for visibility.   Everyone has got their hand out to get a decent review in the larger indie publications (print and online), and it really sucks.

The Indies have been much quicker to adopt new technologies – but this is an example of how that’s being impeded. I fear that what’s happening with Pandora will start happening at the other online streaming services – which will just shift the old monetary impediments for Indies to break through from one paradigm to the next.

The streaming services are under tremendous pressure from their investors to show growth and stable revenue streams – so they are ultimately going to pass those high royalty costs along to either the artists/labels, or the consumer of the service – or both.

Until and unless everyone comes to the reality that EVERYONE has to be willing to take less and adjust their models accordingly in order for us to ALL grow in these new models – we will continue to muddle along at a snail’s pace in this Brave New World of the recorded music business.

The majors are short-sighted. Greed and desperation are having (perhaps) unintended consequences that effect everyone, especially the indies.

As you can tell – I’m passionate about this – I don’t wind you up on many things.   But I see this trend developing and it’s NOT GOOD.

It’s just taking the same old “he who has the most cash wins” paradigm and shifting it onto the new models.  We are never really going to move forward and have a healthy and growing business for recorded music again until everyone takes a hit and agrees to take less in the short term for more in a few years once the new models take hold.

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20 Responses

  1. ProConsumer

    Yes… Costs are commonly passed down to the consumer… and as artists are also consumers, this, if true, shouldn’t be much of a surprise…

  2. david@indigoboom

    Advertising is dead. There is simply to much noise for it to work. The only thing that will get you anywhere is third party reccomendations. This is true for almost everyone, including the huge acts.You are better off buying a new instrument or paying for tuition on the one you already have.

  3. Mike Corcoran

    You might try RadioAirplay.com (formerly Jango.com), which charges labels and artists a more modest fee for spins on their radio network, something like $30 for 1000 spins, and you can pick demographics, geography, etc. The radio service works much like Pandora, but it’s less popular (at the moment). Pandora is sort of like the Cadillac of internet radio right now, and so everyone should probably expect to pay Cadillac prices. Actually, $1000 doesnt sound all that bad for promo. I expect Pandora will to raise prices soon as demand increases. And there are other options for internet radio promo to meet budgets for the smaller indie labels out there.

    • Jeff Robinson

      NEVER pay for airplay. Jango blows as a service.

      • Visitor

        On the listener side it isn’t that bad. Never tried the airplay part of it, but I have a feeling it is not worth the expense.

  4. anon

    Okay so…payouts are always too low…but it shouldn’t cost money to advertise either…and not enough people pay for the service but that money should just come from…advertising?
    If someone has a money tree we can all just harvest this magical income from, please let me know. Clearly, no one wants to admit that they are partially responsible for creating actual financial value here.
    And $1000 is just not an extremely high cost for advertising. Sorry.

  5. hippydog

    Advertising isnt dead, but it has shifted a large ways from how it used to be..
    And the only Advertisement that is actually “free” is WOM (Word of Mouth)
    What it comes down too is, people need to be even more aware of its ROI (Return On Investment)
    Is $1000 a good investment? maybe… it all depends on how many sales (or loyal fans) can be generated by it..
    It would be interesting to hear from someone who used the Pandora promotion and what kind of return they actually recieved on it..

  6. Saumon Sauvage

    Considering the guesstimated payback through Pandora — pennies for plays, not dollars for sales — who could find this rate affordable for any but major acts?

  7. musicservices4less

    Finally reality is starting to set in regarding the conversations that are taking place on this site, SWSW, global record community… The king is dead, long live the king! The “new” record business is really the same as the “old” record business. Nothing overall has really changed except the media and delivery of music and the overall financial size of the music business. But that, like most businesses, will contract and expand over time. Let us not forget all those “genuises” in the late 90’s and 2000’s claiming their is a new record business due to technology. It didn’t really change the business of music in any substantial way. Most veterans knew that and maybe now the new generation is learning and accepting it. It’s just business.

  8. DudeNoDude

    If your an indie act, don’t get too caught up with paying for pandora’s box exposure. 99% of the listeners there are extremely passive and non-participant listeners. pandora’s box not about music discovery at all…it’s more like a hipper MUZAK if anything. Their so called music selectors, have the absolute worst ears and taste. If the labels felt they were such a force, other than a water tap, their relationship would be much much more secure and less antagonistic.

    So instead of feeding the PANDORAS BIG BOX Take that $1,000 or whatever you have and step up and hone your social networking approach…the true 3rd party route, and NPR public radio and Campus stations…ie CMJ.COM reporters…that’s discovery.
    And remember, if the product ain’t good, it won’t matter what you do…..

    • Visitor

      How is social networking any better? It is made up of the same fickle crowd that can only be pleased with things that are free, like Pandora. Social networking as exposure is overrated.

      • Miss Kristin

        Dang internet explorer browser messed up on previous message. Now I’m running Chrome and wanted to say I agree with all in this previous message! Spot ON! So not worth the 1000. investment in my humble opinion.

  9. Westergreen

    The sad part is that Tim Westegren always talks about helping the little guy, and how his service could be so much more helpful if he didn’t have to pay these huge rates. And that includes all this “smart touring” and targeted ads for indie artists.
    $1,000 for a 5 minute campaign is what this sounds like. And no real “up and coming” artist can afford that.

  10. Paul Resnikoff

    More from the source of this article:
    “FYI – to give some perspective on what spending a $1000.00 means to an indie:

    The most that iTunes would pay out is about .67 cents per download, usually less. The distributor would take anywhere from .10 – .25 cents of that (either as a fee or the cost of putting it in their system. So if the Indie is lucky, they might take home .50 cents on each download.

    So they would have to sell 2000 downloads just to break even on that $1000.00 investment, let alone sell enough to make money. It doesn’t sound like much, but as an indie it can be hard as hell to recoup that money.”

    • Jeff Robinson

      Absolutely.

      Those numbers look even worse from an indie standpoint with the Spotify reality.

      Divide payments of .007 cents a spin into the Spotify-determined-minimum $5000 one month advertising campaign and you see why it’s ridiculous. Spotify simply doesn’t have the cross-platform advertising capability of Google’s adwords.

  11. Jaded Industry Dude

    I find it odd that advertising rates have not decreased, but rather increased. The moment I realized I was not able to get clients due to high price tags on my end, what did I do? I immediately come up with a service that fit into clients yearly budget. 1k to Pandora seems way too high for me, but what do I know? I’d argue that they should lower it to $250 which most artists actually could afford and in turn get a slew of new advertisers instead of a handful who will pay 1k. Or maybe I’m naive about how much people are willing to shell out on Pandora…(or Spotify, etc).

    • Miss Kristin

      When I began my promotional investment in myself and my music ten years ago, I would pay whatever because I felt the risk was worth it. I pretended I was Howard Hughes, and I was building the airplane/ship- (I’d say get the money, I don’t care how,,, just get it!) lol I spent a fortune. Now 13 cds later and 500,000. dollars later, bankrupt, starting over a few years ago, I realized it was a foolish crapshoot. My best results have always been organic and did not take much money to achieve. I learned so much and now I choose to help other artists with less money investment. It is word of mouth. Big Fuss Records is doing fine and on the rise without having to spend a fortune. I learned from my mistakes, and now I can produce a better product and get it out there for less. It still is about great music. Visit the new Big Fuss Music store and thanks for this post. I hope I have helped some indie artist somewhere. Miss Kristin Pedderson CEO Big Fuss Records Inc. Don’t waste your money. Indie artists should be able to get promotion for less money. Its the right thing to do. Greedy people suck

  12. 187 Mafia Entertainment

    that’s crazy you might think 1,000 isn’t sh*t but think about it smart wise. every website is charging so at it to that 1k pandora wants. might as well pay a marketing company and get distribution by a indie distributor.