What Pandora Pays Top Artists
blog.pandora.com
blog.pandora.com
Namely, this one:
<img alt="tim-map.jpg" src="http://blog.pandora.com/pandora/tim-map.jpg" width="300" height="200" class="mt-image-right" style="float: right; margin: 0 0 20px 20px;" />
Maybe it's just convenience for the company/blogger, not bothering to resize. But then, every access is a 2+ MB hit -- which is how I noticed it -- both for you, and for the viewer, which may particularly impact mobile viewers and others on limited bandwidth connections.
I wrote an image API at my place of work to take a file by name and accept dimensions in the query string. It resizes the image, caches the file on disk, at and serves the smaller file. However, it's tough to integrate that API with every little WYSIWYG editor we have, so sometimes we still serve up large files in this way.
Usually, intentional retina-quality images have plenty of telltale signs (like the @2x naming convention).
That's a job for a computer, not a human. It's a waste of an editor's time to dwell on such details, just as it's a waste of a newspaper editor's time to worry about the ink in the printing machines.
Also, you just admitted that your own place of work serves large images. Let's not throw blame around that we're not willing to take ourselves.
> you just admitted that your own place of work serves large images. Let's not throw blame around that we're not willing to take ourselves.
Yes, it happens at my place of work, and that is where my generalization came from. I intended to indicate that even when taking steps to mitigate the issue, it still crops up because it's a hard problem to fix. Eventually, work gets delegated to people that don't know everything they should. It is not a big deal as long as people are learning from it.
It happens when we assign web tasks to interns "and non-webdev staff" without proper education/training. So if you follow Toyota's "five whys" rule, it is not the interns' fault at all.
In their latest quarter (Q2 FY2013) "Cost of Revenue" made up $68,036,000 on revenue of $101,267,000. Of that, "Content acquisition costs" were $60,522. That means royalties make up a whopping 60% of all revenue. They're not making a profit and have lost money in FY2012 and FY2011.
0. http://investor.pandora.com/phoenix.zhtml?c=227956&p=iro... (see Historical Financials).
Is that surprising? I'd imagine inventory makes up more than that of Amazon's revenue. Both are in the business of selling stuff made by other people. They help you find what you want, sure, but they're distributors.
Pandora also pays the publishers for the performance right, separately from SoundExchange. This can be a fixed percentage of revenue. Societies like ASCAP, BMI, and SESAC generally administer the rights on behalf of the publishers.
Lastly, Pandora also pays Harry Fox Agency the statutory rate for the mechanical rights. HFA in turn pays the song writers.
Here's a good breakdown from an old and entertaining (view comments) TuneCore blog post: http://blog.tunecore.com/2012/03/the-additional-10-5-spotify...
Check out TuneCore's Music Industry Survival Guide. It's a useful resource.
http://www.tunecore.com/guides/sixrights
Edit: I'm wrong (and so is Tunecore). Parent is partially correct, Pandora does not pay for mechanical rights. They qualify as a PurePlay Webcaster. However, Interactive Streaming services, such as Spotify, do have to pay mechanicals in addition to recording and performance.
Where is it written that all distributors should pay the same price for their wares? Wal-Mart pays Proctor and Gamble a significantly lower cost than small grocers. Why? Because Wal-Mart, quite frankly, has P&G by the balls. Yet Wal-Mart is the source of more revenue for P&G than any other distributor, so they earn the right.
Now I realize that Pandora is the exact opposite- the distributor has no leverage, but I believe the same principle applies. There is absolutely no reason that distributors should be treated equally. Competition varies widely across different distribution channels. If Pandora can't operate at a profit, I don't believe it is incumbent on the artists to make way for their sustainability.
Nothing stops Pandora from negotiating regular licenses with content producers. Pandora doesn't do it because they'd get a worse deal that way.
Why is $0.002 a fair price to pay each time you play a song? Where did that number come from? Why would Pandora pay this, but Sirius not?
When the largest, most efficient net broadcaster, after 11 years and over $300M in projected 2012 revenue, cannot optimize their way out of a -14% margin, what mathematical justification is there for this $0.002 figure?
The number is supposed to be based on a "willing seller, willing buyer" calculation based on the market rate of what companies are willing to pay, and yet the only rates that were allowed into these discussions were the mandated rates by the copyright royalty board - not the rates that independent labels might offer, or the companies that had royalty-free agreements, like ours (www.earbits.com).
You will be hard pressed to find a person more pro-artist than me, but the per-stream rate of $0.002 makes zero sense, if a per-stream rate makes any sense at all. Asking for neutrality across platforms seems more than fair.
The real reason the labels don't want to budge with Pandora is simple. The royalties go to SoundExchange, and then get distributed directly to artists - most of them unrecouped by their record labels. Labels want to destroy anybody whose royalties don't go through their accounting department, where they can file them away under unrecouped and keep every penny the artists deserve. That is the real reason for this battle.
An album is more feasible to make on one's own, but it's also much more likely to be listened to many more times. I've heard my favorite albums far more than I've watched my favorite movies. But at the same time I realize how much it costs to produce a major motion picture, so I'm okay with paying ten bucks to sit in a theater for two hours. They provide me different kinds of value.
That quality/impact has always been what gave creative works value—the scarcity of physical distribution only enforced that value, it didn't create it. A physical copy of an album nobody liked couldn't be sold for $15, even though it was no more sharable than a physical copy of an album everybody liked. The problem facing creative works with the internet is finding a way to make money off of producing high quality works when you can no longer rely on physical scarcity. But that doesn't mean there is no value there anymore: genius and talent are still scarce.
Moving to models built on services like Pandora and Spotify could turn out to be a good thing if it shifts rewards in favor of things with lasting quality, not just a "make two good hits and ten crappy songs to push a bunch of one-time album sales." But I think they're going to have to bring in a lot more revenue to be really effective at rewarding truly talented artists. But hey, radio is able to do it, and that's a "free" service too.
I'm not saying they're overpaid, but it is an interesting economic observation that the supply side of the market might be oversaturated relative to the demand.
Perhaps this is a slight tangent, but are you sure about that? It seems daunting now, but that's probably because you're at the rock bottom of the learning curve. I'll bet there has been more than one brilliant musician who's looked at their sequencing software and thought "I could never write this". I don't mean to suggest that there's a Mozart inside everyone, but I don't see why we couldn't teach musical literacy as "easily" as we teach programming. Music Engineering 101?
Maybe more to the parent's point, it's also possible that it doesn't require a Mozart to make a popular song today. PSY's Gangnam Style is clever and fun but if you turn off the video and don't understand the lyrics, the music is basically sampled from 90s trance hits. You could make a similar argument for Lady Gaga. The major creativity seems to be something layered on top of the music. How notable would OK Go be without the brilliant videos? Yes yes, I love their music too - but there's a lot of great indie rock out there.
Maybe there is a supply/demand curve for music. It's an interesting perspective that I have never heard before. Also consider: Old music doesn't "expire", so as new music is created, it increases the total supply. New bands are not only competing with each other, they're competing with every band that has ever released music.
Creating digital music does have a learning curve...I had a rudimentary knowledge of music. I took a year of piano lessons. I could imitate some of the music I liked. The hardest part was creating something unique. I could be proud of.
Sequencing will always be fun for me. I have amassed some cool toys over the years. It is nothing more than a hobby.
Soundcloud is like a musicians github.
For me, it's obvious that songs have people-enjoy-it-value. It's simultaneously obvious that it has no marginal-cost-to-produce-value. To the extent I believe that music will become more rare if it pays less well, then, I should support some manner of government regulation to protect the industry that produces it. (And, of course, there's the unstated assumption that people will generally not pay when they don't have to, which is also open to debate both on theoretical and empirical terms. And a bunch of other unstated moral assumptions that I'm not going to go into.)
We all know that anecdotes are not data, but the legacy music distribution model seems to be optimized for using labor efficiently a case where fixed and marginal costs are higher than they currently are. It is far from obvious that those optimizations are good ones where the cost of recording equipment has dropped by orders of magnitude and the cost of distributing a single song is so low that people will do it for free.
[1] http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs
I wonder how much Pandora makes (or loses) on that artist.
Edit: Oh, I see. I assume these artists just have much better music than they have marketing. It would be interesting to know what sets them apart, though.
I'm also wondering if those unknown artists arent possibly algorithm glitches or they just luckily match some sonic parameter so they keep coming up in the playlist. I'm so cynical :)
http://tech.fortune.cnn.com/2011/06/13/pandora-the-money-los...
If you divide total Pandora royalties by the number of artists in the catalog, you'll realize that these "unknown" artists they're showcasing are outliers by a huge margin, and probably put into rotation just for a publicity purpose like this.
edit: spelling
That's why I don't listen to Pandora. They keep trying to replay the same old music again and again.
Frankly, I don't see anything innovative about Pandora. They just use a crude classification of songs. I already have enough of radio stations, thank you very much.
It is a different royalty than publishing royalty which is BMI/ASCAP and those monies are sent directly to the label and they decide how to dole it out.
FYI terrestrial radio pay's 0% of revenue for performance royalties, Satellite Radio pays about 8% of revenue and Pandora pays around 50%
This unfair system of royalty payments were set up by the RIAA mafia in the mid 90's to discourage Internet radio since it would be a direct competitor to the old guard.
That is why there is current legislation introduced 4 weeks ago to bring parity to the royalty system. Why should a song that is played on FM radio pay a different set of royalties than one played on Satellite or one streamed on the Internet?
I personally have received several checks from internet streaming, for some big hit songs I played on as a session musician, yet those same songs, which were played tens of millions of times on terrestrial radio, paid me NOTHING, because terrestrial radio does not pay performance royalties.
I am not implying that this would be economically feasible for them, just curious if there is any reason it absolutely couldn't be done
French is blowing up right now because of "Pop That", current #2 hip-hop single that features Rick Ross, Drake and Wayne.
Not trying to put French or Pandora down, but his JV deal with Maybach Music Group and the six figures that it usually costs to get the current top 2 rappers on his track probably have more to do with those royalties than Pandora right now.
it'd leave you seriously sad, if you have any morals. Grooveshark do not pay royalties on most of their streams, it's really pretty shameful. They abuse the hell out of the DMCA.
"We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S."
I long for the day when these prehistoric business and licensing models are finally burned to the ground and I can just spend my hard-earned money on music and motion-pictures without having to worry which country I am in and which country the song or movie is from.