Pandora CFO: “Steve Jobs Eviscerated the Music Industry…”

Steve Jobs
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Pandora chief financial officer Mike Herring, speaking at the Wedbush 2015 ‘California Dreamin’ Technology’ Consumer Management Access Conference in Santa Monica, CA, December 10th.

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There’s nothing worse for a venue than being half-full.  The artist is unhappy, they have a half-full room. You don’t sell as many beers. You don’t sell as many tickets obviously – like everyone loses.”

“You increase that 20% and it’s a dramatic difference.  And that’s – what Pandora brings to that equation is demand.  What we’ve done this for Adezza, when we did this for Rolling Stones – Rolling Stones have been doing pre-sales of their tours forever and usually about 20% of pre-sale allotments gets sold.  Pandora sold 100% of the allotment, 55,000 tickets in 24 hours, not because of any other reason other than we knew exactly who wanted to buy those tickets.

“Ticketfly brings a platform to that equation.  It brings the footprint.  It brings those things together and it brings tremendous value not just to us, of course we want to drive revenue for Pandora and profits for Pandora – we also – it brings tremendous value to the listeners.  They know about concerts when they come and they can attend and see music they love. It brings tremendous value to the artist because people show up to their concerts.  The venues get a sold-out house.  The value chain, the whole value chain raises. That’s what Pandora’s basic philosophy is how do we bring the music industry back. It’s had a tough 15 years.

“I mean Steve Jobs eviscerated the music industry with the launch of iTunes and it’s been downhill ever since.  And the download was supposed to save it, that didn’t happen.”

Now on-demand streaming is supposed to save it.  We will see if that happens.  I think what really needs to happen is we need to think broadly how do we drive engagement overall as a music industry and that message is starting to make sense.

All these things matter in the context of lifting the overall industry because we need the industry to be healthy for Pandora to survive. And we want to – we also make money along the way.

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Image by Ben Stanfield, licensed under Creative Common Attribution 2.0 Generic (CC by 2.0).  The full, 6-plus page transcript (including the comments related to Steve Jobs) is at Seeking Alpha, here (it’s an amazing site).   

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18 Responses

  1. Selective Reasoning at It's Best - No, It was Piracy Bonehead...

    The decline in sales started with the launch of Napster. The launch of Itunes neither slowed nor accelerated that decline. Itunes is the only digital service that actually has worked for both consumers and artists. It’s also completely transparent – everyone knows the economics through the value chain.


    Spotify is the equivalent of Itunes selling albums for 10 cents and songs for a penny (or less). But somehow that and Ad-Funded Piracy which created this downward pressure on the business are NOT the problem, but Steve Jobs is? God I wish he were alive to respond to this nonsense.

    And then there’s Pandora, protected by legacy government consent decrees and they’re still pushing to reduce the royalties they pay to songwriters by 85% of current rates.

    It’s like no one knows how to use a calculator. The whole thing is a slaptastic adventure in epic BS.

    • Me

      No, Spotify is not the equivalent of selling an album for 10 cents. It’s the equivalent of providing someone the access to listen to the album, and the more they listen to the album the more money an artist receives.

      • lroosemusic

        …with the average payout per listener, per album likely landing in the 10 cent neighborhood.

  2. DrugsAreBadForYou

    “I mean Steve Jobs eviscerated the music industry with the launch of iTunes and it’s been downhill ever since. ”

    Oh..ok. I thought it was piracy and Napster that did it, but now we know. If iTunes didn’t happen, piracy and Napster would have saved the music Industry.

    He is definitely smoking the good stuff. I want the same.

    • Anonymous

      “Oh..ok. I thought it was piracy and Napster that did it, but now we know”

      Haha, yeah.

      Seriously, the industry would be long gone without iTunes.

      Pandora, on the other hand, is just Pirate Bay Light.

      • Name2

        Apple singlehandedly devalued the proposition of buying downloads with their low-quality sound. Even today, their lossy audio offerings are a lesson in buyer’s remorse. Even on exclusives.

        No excuse in 2015. None.

    • jDre

      Let me explain to you why this statement is being made. Yes, it is true that Napster was the “cause” that sent the music industry into a tailspin, but there was a lot going on at the labels during this time. I was at BMG Entertainment, and it was my job to identify new technologies for the labels to deploy in order to directly compete with Napster. The problem wasn’t that the labels didn’t have “platforms”. I had built a video streaming platform that was ready to go, but just as the other label based music streaming platforms that were in the wings and waiting to be deployed .. none of the labels would cross license content to one another. This literally created a stalemate at the labels. Each label had went about and built it’s own “Napster”… in many ways, what the labels were offering was a lot better then Napster. Heck, a syndicate within BMG’s parent company, Bertalsmann Ecomm actually went ahead and bought Napster without even telling BMG!

      All in all. there was plenty of innovation at the labels, however.. the executives couldn’t be bothered to follow through and do what needed to be done. In the end, what happened was the entire music digital music industry was literally handed to Steve Jobs on a silver platter. Why? Because the executives couldn’t get it together.

      Most of these executives ended up jumping ship and moving into the much more lucrative “gaming” industry once the writing was on the wall, and a lot of very smart and hard working people got punted out of the labels only to find themselves in the middle of the bomb with no where to go, and no one who really cared about the skills and experience that was acquired during these times.

      Apple, not only took over the music industry.. They quite literally took over the technical side when it came to distribution technologies going forward. It took over 5 years before Apple even felt a hint of competition from others in the digital music space.. Mainly because it took time for Android to gain traction in the mobile marketplace.

  3. Name2

    I walk around town, and I see a lot of Billboards for Apple …. TV.

    Music? Not so much.

    Bart Simpson, not George Clinton.

  4. Rick Shaw

    What a complete joke. Yes, one man did it. Try looking at the direction the industry was headed before tech came in. It was the egos, lack of artist development and poor choice in releases that has demolished the music industry. The tech plays were just swarming vultures that saw the opportunity as Rome was burning and took advantage of it.

  5. pbody

    Another complete moron running a major music company. Its no wonder why these companies are not profitable. They are all smoking crack, at least I hope so. That at least gives us some hope.

    As everyone knows, it was Napster that brought down the industry, Steve Jobs created .99 downloads which actually is STILL bringing in more profit than pandora ever will. It is also still a major money maker for independent musicians.

    The comment that itunes brought down the inudstry is just incompetent and shows complete lack of knowledge. Its really just completely made up and not based on a single fact, other than the date itunes came out was around the same time the effects of piracy started revealing itself on the industry. The CFO of Pandora must have or should have failed Critical Reasoning class in college. Maybe this guy is so entrenched in datascience that he is coming up with these robot like conclusions that make no sense.

  6. Remi Swierczek

    This PANDORA GUY IS intoxicated with his own bland of DRUGS!!!!!!!

    Pandora, today the LOOSER, is perfect candidate to become profitable $5B music store!
    The industry has to abandon advertising and subscription MIDDLE AGES and enter simple and fair to all (to good or fair to Google boys) $200B DISCOVERY MOMENT MONETIZATION.

  7. Literati X

    Steve was a great man that played a very significant and valuable role in moving the music industry into the 21st century online: I don’t need the financial syndicate to prop me up inside this shit. I got 88 billion in USD cash inside the battle poet’s story of immortal X. . .Anyone whose anybody inside the music industry know ‘ Terror Monster X ‘ My , X , single handed –deep down in Pickens County Alabama coeXist with the entire super star population in , Atlanta Georgia , when it comes down to musical asset net worth. . .’ Terror Poet ‘ always busy inside the serial killing business of beheading motherfuckers deep into the night until broad daylight ! , Phantom X , falling in mind–:: out of sight . . .

  8. Versus

    Jobs/Apple (as with so much technology) was certainly a mixed curse/blessing. iTunes store, good on the one hand, but then de-bundling individual tracks and doing away with DRM were negatives. Now the move to streaming (which is post-Jobs, of course), looks to make matters worse. iTunes sales will probably disappear, and be replaced by the micropayments of streaming.

  9. dhenn

    This guy would be a joke if Pandora hadn’t done so much damage to the music industry. What a load of crap.

  10. FarePlay

    Mike Herring is yet another example of someone working at an influential level in an industry he knows nothing about. Jobs had no choice, because the labels and legislation failed to kill piracy. Musicians were too afraid and confused to support Ulrich and for 15 years we’ve been stuck with a Safe Harbor that protects websites that exploit music for personal gain.

  11. Scout

    Pandora wouldn’t be making such claims if they’d been on the scene before iTunes. The real problem goes back to the 1980s when Sony talked the US recording industry into going digital. From there things went down hill in degrees until Napster. Why didn’t anyone stop to think music should not be on the Internet? The net should only be used to MARKET the music. Technology is not a distributor or dispensary.

    Decades of short sighted calls and procrastination created the situation where Jobs took over the entire industry.

    Again, if Pandora had been there first, they wouldn’t be screaming bloody murder.

    Truly a great solution to all the red face tantrums is to return to analog recording, and vinyl product. It’s expensive right now, but that cuts out the dead wood. When 10,000 CD titles were released in 1999 and 110,000 titles were released in 2012 you see that manufacturing hasn’t suffered. Sales have suffered. Too many decisions to make usually amount to no decision at all.

    Pandora, grow up and grow a pair.

    • jDre

      I can vouch that Pandora was on the scene well before iTunes was. I had actually conducted a Digital Streaming License evaluation on the first gen of Pandora’s platform as early as 2000-2001. They were pitching their Music Genome and “Collaborative Filtering” technologies back then, and ultimately that is what made them get the licenses they needed. I couldn’t even begin to name off all the “Streaming Radio” start-ups that were pounding at my office door for a license.. Unfortunately, back then it wasn’t as easy as filing some paperwork with ASCAP and launching. Each label had to sign off on the platforms. Pandora was one of the few that actually delivered what they promised.. Hence why you see Pandora’s apps OEMed in almost every consumer electronics device sold out there, and lets be frank. Pandora is only allowed to operate in 3 countries (this is changing with the new Publishing deal with Sony)..

      Full disclosure here, I am a contractor working for Pandora now. Prior to Pandora, I was the Manager of New Technology at BMG Entertainment from 2000-2002.