If you don’t have a problem with Tim Westergren making a million dollars a month while emailing artists to support lower royalties, then maybe you need to look at the situation differently. This isn’t ‘playa hating,’ rather, it’s questioning why the playing field is so uneven and distorted to begin with.
Playa hating is jealousy: it means hating other people simply because they’ve accomplished more than you have. But what if those accomplishments are coming at the expense of others?
Indeed, Westergren ‘started at the bottom’ and now he’s here: Pandora has the most listeners and listening hours of anyone online, and accounts for nearly 8 percent of all radio listening in the United States. Those are very significant accomplishments, and to hear Westergren tell the story of when he was at ‘the bottom’ is inspirational.
But it’s now becoming obvious that Pandora’s big numbers — by design — are coming at the expense of not only profits, but artist welfare as well.
These big numbers are mainly interesting to Wall Street, investors, and few top Pandora executives who are becoming obscenely wealthy. It makes it difficult for Apple to push Pandora off the iOS deck; it squeezes out up-and-coming competitors like Slacker and iHeartRadio. But this all seems to be creating a perverse disincentive against actually making money and creating a viable business, unless it involves markedly slashing artist royalty rates.
There are other ways to do this. Since the beginning, Pandora has always argued that royalty rates are the problem, not their inherently flawed business model. But a series of events over the past week are now substantially challenging that assumption, and potentially changing the discourse on Capitol Hill. Because it may not be that Pandora can’t solve their monetary problems on their own, but rather that they don’t want to.
There’s now mounting evidence of this. It all started when Pandora, for reasons related to royalty expenses, resumed listening caps for power users on mobile. But instead of ditching ‘Netflix style,’ a substantial percentage of listeners actually stuck around. It looked like this.
Now, there’s more research confirming that forcing listeners to pay generates significant revenue. In fact, that simple cap put Pandora at the top of this app revenue ranking (excluding games).
So, more revenues per user means a better model, which means less need to lower royalties, right? Not exactly: in a recent financial call, Pandora CEO Joe Kennedy indicated that ‘Pandora One’ premium tiers would be used sparingly, as a mere addition to the mainline, free service.
All of which makes it really hard not to be cynical here, especially as executives like Tim Westergren continue to curry favor with confused artists. Because maybe a viable, workable model involves smaller listener levels but actual profitability, while maintaining artist royalty rates. But that’s not a version that Pandora likes, or wants you to believe is possible.
And that’s why they’re getting hated on.