musicFirst Calls Pandora’s Letter Campaign “The Worst Music Industry Scam Ever Seen”

Last week, Digital Music News published a petition letter being sent by Pandora CEO Tim Westergren to various artists.  But that was just one example of a far broader ‘hearts-and-minds’ campaign designed to rally artist support for a royalty-lowering Congressional law.  MusicFIRST Coalition executive director Ted Kalo hopes you’ll consider a completely different perspective.

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After Pandora’s “Internet Radio Fairness Act” collapsed last year under overwhelming opposition, we figured they would try to rally at least some token support from musicians before bringing the bill back this year.  But we honestly couldn’t fathom how they would convince any musician to support the legislation, which could slash musicians’ Internet royalty payments by 85%.

Now we know.

Emails they’ve been sending to our members lay bare their cynical strategy: ask artists to sign a vaguely worded petition, don’t tell them what it’s for, and offer the false promise of promotion in return for signing on the dotted line.

This might be the worst music industry scam I’ve ever seen.

The emails are coming from various folks at Pandora – could be Mike Fink, Lead Curator, Artist and Label Relations Manager for example, or even Pandora CEO Tim Westergren – and start with a benign subject line like “Hello from Pandora.

“You represent a particularly important part of our collection – independent artists that are getting a lot of exposure. I’d like to give you a look at Pandora’s listener data analytics and hear your opinions about how we can use this information, and our product’s capabilities to benefit your career.”

Think about it. You are an artist who has submitted your music to Pandora and you get this unsolicited email offering to help you with your career for free. This could be your big break.

So what’s the catch? The emails direct you to sign on to a “‘letter of support’ for internet radio.”  But don’t worry — the Pandora exec assures you that the letter “is not to advocate a particular position, but make members [of Congress] aware of the missing voice on this issue, and for that matter other issues surrounding copyright, royalties, licensing, etc.”

OK, but what is “this issue” that these emails keep referring to? Pandora doesn’t seem real interested in just coming out and explaining, but we get a clue in the petition itself:

“We are all fervent advocates for the fair treatment of artists. We are also fervent supporters of Internet radio and want more than anything for it to grow; and to grow as fast as possible.”

You want Pandora to grow “more than anything,” huh? More than getting paid a fair wage for playing your songs?

Tim Westergren has argued that what Pandora needs “to grow as fast as possible” is to cut musicians’ royalty paychecks by 85%, which is exactly what the bogus “Internet Radio Fairness” bill would do. The petition doesn’t come right out and endorse this, per se, but when IRFA comes up again this year you can bet that Tim will be waving this petition all over Congress as proof that musicians support these absurd arguments.  You just need a look at the videos Pandora has already put out to see how vague artist testimonials in support of Internet radio can be manipulated to promote the company’s corporate agenda.

As the Recording Academy’s Neil Portnow has asked: “Would you sign a petition to get paid less money?”

SoundExchange has warned of “divide and conquer” tactics.

But what about the gold Pandora offered you?  A peek inside its precious listener data?  Well, ask yourself this: If Pandora was really looking out for Independent musicians, would it ask them to join some phony advocacy campaign before sharing what it can?

When it comes to Pandora’s email solicitation: buyer beware. You may have just received the musician’s equivalent of paying $100 for a $25 coupon book.

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14 Responses

  1. Kei

    I believe the problem lies in the “collecting agencies” who take upwards of 50% of Pandora’s profits and then “distribute” the funds to artists through some absurd formula. I am all for the artist being paid for thier work but if you really dig into the way they are paid … its an insane formula. Before we bash Pandora for “not paying artist” I would rather someone look at the collecting agencies and how they distribute and fail to distribute to the artist. I see no one taking this approach and that is telling in and of itself.

    • steveh

      Hey! Do you have first hand knowlege about this?
      Come on please spill the beans about this alleged “collection agencies” scandal!
      We want to know!

      • Me

        Stevia, you’re kind of an idiot. It’s all over the Internet. It’s called sound exchange, and they have over 50 million in holdings that haven’t been distributed, numbnuts.

        • steveh

          Sorry this reply is not good enough. There’s all kind of stuff “all over the internet” – Elvis is still alive I hear…
          Be precise please:-
          1. Are you saying Sound Exchange is corruptly witholding payments to artists?
          2. The reference was to “collection agencies” in plural. Please name the other agencies that you suspect of malpractice.

          • Noah Peterson

            If you actually go to the Soundexchange website, you can see the THOUSANDS of artists who are owed money. Some don’t know and some refuse to sign up. I’ve gotten a small check from them. I’ve told my friends that I’ve seen on there that they need to sign up because they have money due them.
            As for their “splits” it’s thier way of simplying the standard ASCAP/BMI/SEASAC rates. The PROs split the roylaty collection this: 100% to writers, 100% to publishers for a grand total of 200%. Soundexchange is simply using a grand total of 100%. It’s the same thing.

            Radio royalties are collected via a sampling of formats and markets. For those of you not getting your college radio rates keep in mind three things: College radio pays less than a full power FM commercial station, college radio generally has a MUCH SMALLER terrestial broadcast area, many, many, many college radio stations are staffed by students who don’t fill out their playlists and if they do, the are full of errors, and for those that do that, they still may not submit those lists to the CMJ. In summary, most college radio reporting is due to internal practices. And yes, I was a Dj and genre director at a college radio station and saw this all of the time, and my station was adamant abuot getting playlists done. Of course, they also didn’t report to CMJ so it was moot. But since it was STUDENT run, they didn’t know. They did eventually find out, but I’m not sure if they still report or not since the station manager changes every year. This is why college radio has limited influence. Tracking anything is very difficult. Too much turnover in staff and DJs who are college kids.
            That being said, radio royalties are only one of the mechanicals that PROs collect: there are others. The best way to find out about them, is to look into joining one. These are good organizations that pay real money to real musicians. If you think they don’t, you’re wrong. More than that, you’re ignorance is such that you really shouldn’t weigh in on the discussion at all; except to ask questions.
            That being said, there are other organizations out there that collect additional royalties that BMI/SEASAC/ASCAP/SoundExchange doesn’t. Just becuase you’re in a band and you have a record on CDBaby doesn’t mean you know anything about the business. I know a lot, and what really gets me, is how much I don’t know. I don’t see enough of that attitude or self-awareness on these boards.
            You need to be aware of organizations like Pandora and Google that are really dangerous when it comes to stripping away your property rights via legislation. You clearly have no idea how far reaching these descisions will be. Why do think technology and pharmeceutical companies are against these? This is copyright; it goes way beyond music.
            That being said: could BMI/ASCAP be more transparent? Yes. Of course. But I get my checks every quarter. Once in a blue moon I even money terrestial radio play. I do interact with my PRO, I do give them feedback on what I like and complain about a variety of issues that I don’t. I’ve even seen some changes.
            What I’m not going to do is transfer the focus off of Pandora and it’s complete and utter evil agenda to screw me and all my fellow musicians because some other organzation could be doing a BETTER job. That’s a different fight, for a different time. This is now, this is critical. And right now, those other organzations (which server their membership) are allies in this fight against Pandora. Educate yourself.

        • um

          If they haven’t distributed anything it’s because artists haven’t signed up. And the biggest thing preventing people from signing up (besides not knowing about it) is jerks on the internet claiming it’s a “scam”.
          The “formula” isn’t absurd. It’s completely straightforward. SE takes a tiny amount (less than 6%) to cover costs. Then they divide the remaining amount like this:
          45% to the featured artist.
          50% to the copyright owner (often the label, but more and more frequently artists own the copyrights themselves)
          5% to backing performers (in a union-administered fund)
          Totally simple. People who claim SoundExchange is a “scam” usually have some other agenda besides getting artists paid.

          • Clinton

            70% of the industry is now made up of independent musicians and 30% the Major labels YET the PRO’s (SE included) collect and distribute just about 100% to the Majors only which is then distributed to copyright holders in the amount of ‘market share’ in the form of blanket liscenses they all issue. Litterally, major labels are getting rich off the sweat of indies. Indies only get paid on what’s actually played if at all. Not market share (which indies make up 70%). Upload a song to Spotify without using a distributor and you’ll see they clearly state “we do not pay for artists to be on the service’. The system is so completly shattered I doubt it will even be put back together. If it looks like a duck & quacks like a duck, it’s a duck! Streaming services represent a nuclear holocaust to the recording industry PERIOD! Stay far far away. If they had their way they would pay artist’s NOTHING AT ALL.

          • Visitor

            Can you back up your claim of 70%? Through Joint Ventures, distribution agreements and other deals, majors have rights to a lot more music than you probably think. Also, the popular music that people want is typically owned by one of the majors.

            Here, it shows that indies have about 33% market share in recorded music. When using accurate information, it only takes a minute to show a source of proof.

    • Jeff Robinson

      The Collection agencies scandal is that BMI and ASCAP force college radio to pay them and then don’t track anything college radio plays other than those stations in the Top 40 markets. All other stations are merely extorted for $$$ with no bearing on the direct product of the Performing Rights Organizations. ASCAP directs the artists to focus on the Top 40 markets if they expect to earn a dime in airplay royalties. How many listeners do you think a 10 to 300 watt fm station like WBAR in Manhatten has and do you they even appear in a local Arbitron Report? Arbitron matters too as ASCAP uses that status for weighting. In this era of digital water-marking and tracking services like BDS, BMI and ASCAP still operate in the Stone Age. It’s unacceptable.

  2. Adrian Brigham

    Music First may have its heart in the right place but their head is in a place where the sun doesn’t shine. I represent and manage recording artists and it is in our best interest that artists get paid, and paid fairly. That isn’t an issue. What is an issue is not just the streaming royalty rates, but much more so how they are applied.
    In it’s infinite wisdom the governing body has decided that all streaming is equal, so therefore all rates should be the same. In reality that is ludicrous. Streaming rates were set very low because internet RADIO stations do not have the ability to generate sufficient revenue to pay high royalty rates. That’s an undeniable fact. Part of our business is doing radio promotion to terrestrial and net stations. We know! Raising rates on net stations that stream will simply kill off many stations, and these are the very stations that artists, especially independent ones, rely on to introduce their music to new audiences. Indie’s already complain about the lack of exposure they get on radio, and now wiping out a large number of internet stations will simply cut out what little chance the have of reaching potential new fans. How smart is that?
    The problem isn’t with legitimate RADIO stations, which Pandora is one of. It is in the definition. When you, as a listener, hear a song on a traditional radio station you hear it once. That’s it until it comes back through the rotation. You cannot listen to it anytime, anywhere you want unless you BUY it. This is what RADIO is all about. Exposure that leads to sales! Unfortunately, because they use the same technology, on-demand streaming services such as Spotify, which are simply cloud based storage systems, can sneak in under the same low royalty rates the legitimate stations pay. With these on-demand services you can listen to whatever, whenever, wherever, anytime you want, and you don’t have to buy that dreaded download. They music is now free.
    Pandora and other streaming RADIO stations are great methods of exposure that lead to sales. On-demand streamers kill sales. The issue isn’t the technology, it’s the use of that technology. One way is great, the other is a disaster! What needs to be done is to change the definition and rules of how the royalties are applied, not the rates. Keep them low or even abolish them for the stations that are true RADIO stations and expose and advertise our music for free. That’s a bargain. For the cloud based on-demand streamers hike the rates and nail them to the wall. They’re the ones screwing the artists by giving the music away for free.

    Let’s be smart about this folks. The only ones who will benefit from hiking streaming rates across the board will be the big broadcast stations as a lot of their competition will be wiped out, and last I looked (yesterday) the broadcasters aren’t exactly friendly to independent musicians.
    You can’t have it both way guys, so which do you want?
    Adrian

    • Jeff Robinson

      “Pandora and other streaming RADIO stations are great methods of exposure that lead to sales.”
      Pandora won’t play a majority of indie music. It simply isn’t how the Music Genome works. Pandora certainly doesn’t have the broad range of taste that college radio does. Considering the immense playlist ability of Spotify and the fact that users are reliant on streams triangulated from two artists on Pandora, it’s clear Pandora will die a painful death in the next 5 years.

      • Adrian B

        It is true that Pandora deals primarily with major label artists. I have spoken with them and they have said as much. In our genre of music, which is full orchestra Adult Standards, my wife’s 2009 album was the only indie album accepted by them where all of the other indie artists we know in our format were rejected. I cannot give you an “official” reason for this other than they told me indie material has to be of exceptionally high quality for them to accept it. That was their wording.
        Being in the business of radio promotion however I can give you the more real world reason. Indie artists always complain about being shut out of the broadcasting world in favor of the major labels stars, and there is a great deal of truth in that, but it isn’t for the reasons indies think. Indies like to believe that the majors “pay off” the stations to keep them out, but that isn’t the case. Yes, there is a lot of money involved, but it’s not in payola, it is in marketing, and this is something the Indies either don’t do or can’t do that the major’s excel in.
        First you need to realize that as an Indie artist you are not the only one in the world. You may think you are, but so do the millions of others just like you. You may also think that the program directors just sit with bated breath waiting for your album to arrive as it is the greatest thing in the world and it will be the only new album sent to them this year. Not quite true. If you go into a PD’s office you will likely see it with stacks of CD’s that go half-way to the ceiling, and that will just be this week’s batch. Also contrary to popular opinion it is not the job of the program director to spend hours upon hours auditioning new music, especially from unknown artists. They have a station to run and finding new music is at the very bottom of their list of things to do. They typically rely on a small and TRUSTED group of independent radio promoters (agents) to bring them new music that has been pre-screened to fit their format. This is what my company does.
        Thing is most Indies don’t even know about this and just send in the unsolicited CD’s expecting them to be listened to and played. That’s not likely to happen! Even if they do understand how the system works it is also not likely the Indie can effort a radio promotion program because they are very labor intensive and therefore quite expensive. Advantage to the labels with the big budgets.
        The other thing you also have to realize is that with broadcast radio stations they exist by selling advertising and the program director’s main job is to play the most popular music in their format otherwise listeners will tune out, ratings will drop, and ad sales will go down. It is not the job of the PD to “break” new artists and new music. That is actually a big risk for them if the public doesn’t like a particular song and jumps to the next station. PD’s tend to stay with known artists that chart well, and again that is a big advantage to the major labels. The majors have the budgets to run big marketing an P/R campaigns to break new acts and get them on the air. Indie’s do not.
        This is how the world of broadcast radio operates. The reason that college and community statios are much more responsive to Indies is that they are publicly funded and therefore do not have to rely on advertising revenue, so they don’t care if what they are playing only appeals to a tiny audience, and believe me most of them have audiences that number in double digits. The same holds true for net stations. There are tens of thousands of internet stations and with the audiences divided up among them into tiny little groups having an AQH (average quarterly hour) of more than 25 listeners is an accomplishment.
        This is why net stations cannot afford higher royalties. Most are money losers to begin with and are hosted by people who do so out of their own love for the music they play. Raise their costs and they’ll go away. Net stations cannot sell local advertising, which is the backbone of the broadcast world, because they are not local, and no national brand is going to spend a penny on a net station that is lucky to have 100 distinct listeners a week. This is just how it is folks. This is the reality of the world of radio.
        As for Pandora you can dislike them if they didn’t accept your music, I can understand that, but they too depend on offering songs that they feel will be the most popular with their members. Remember, you can only “skip” a few per hour, so if they are playing “suggestions” that don’t fit your tastes they risk the user just shutting them off. Pandora, like any radio station as I defined in my previous post, sort of plays it “safe” too. That I can fully understand. Their vision, like it or not, is for a large worldwide audience and not one that caters to small “niche formats”.
        I hope this explanation helps a little, at least to dispell common misconceptions about the world of radio. I’m not saying it is perfect or fair, but this is simply the truth of how it works. If an Indie wants to compete with the big boys he/she is going to have to do what they do, and that means putting together a solid marketing plan and budget. They are going to have to operate as a business and not just as an artist, other wise the CD’s they send to the stations will just become a new frisbee for the secretary’s Chihuahua.

    • rastamouse

      Pandora plays 1 minute of advertising per hour. If Pandora played 5 minutes of advertising per hour, it could still play a lot of indie music.

      • Jeff Robinson

        I’ve said this for years.
        They have a terrible sales team. It would be interesting to know how large their entire staff is vs. how many sales people are selling the station(s). Chances are, they get a lot of sales in grouped digital purchases from entities like Google. You can only charge what you’re getting paid, right? It may be beyond their control.
        Does anyone know how this works for a digital broadcaster?